Correlation Between Genfit and Ardelyx

Can any of the company-specific risk be diversified away by investing in both Genfit and Ardelyx at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Genfit and Ardelyx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genfit and Ardelyx, you can compare the effects of market volatilities on Genfit and Ardelyx and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Genfit with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genfit and Ardelyx.

Diversification Opportunities for Genfit and Ardelyx

0.28

Correlation Coefficient

Genfit  Ardelyx

Modest diversification

The 3 months correlation between Genfit and Ardelyx is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Genfit is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Genfit are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Genfit i.e., Genfit and Ardelyx go up and down completely randomly.

Pair Corralation between Genfit and Ardelyx

Given the investment horizon of 90 days Genfit is expected to generate 1.0 times more return on investment than Ardelyx. However, Genfit is 1.0 times less risky than Ardelyx. It trades about 0.03 of its potential returns per unit of risk. Ardelyx is currently generating about 0.03 per unit of risk. If you would invest  410.00  in Genfit on September 2, 2024 and sell it today you would earn a total of  11.00  from holding Genfit or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Genfit  vs.  Ardelyx

Genfit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genfit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Genfit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ardelyx

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ardelyx are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Ardelyx may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genfit and Ardelyx

The main advantage of trading using opposite Genfit and Ardelyx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genfit position performs unexpectedly, Ardelyx can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ardelyx will offset losses from the drop in Ardelyx's long position.

The idea behind Genfit and Ardelyx pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.