Correlation Between Genfit and Jazz Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Genfit and Jazz Pharmaceuticals 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 Jazz Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genfit and Jazz Pharmaceuticals PLC, you can compare the effects of market volatilities on Genfit and Jazz Pharmaceuticals 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 Jazz Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genfit and Jazz Pharmaceuticals.

Diversification Opportunities for Genfit and Jazz Pharmaceuticals

-0.73

Correlation Coefficient

Genfit  Jazz Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Genfit and Jazz is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and Jazz Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jazz Pharmaceuticals PLC 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 Jazz Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jazz Pharmaceuticals PLC has no effect on the direction of Genfit i.e., Genfit and Jazz Pharmaceuticals go up and down completely randomly.

Pair Corralation between Genfit and Jazz Pharmaceuticals

Given the investment horizon of 90 days Genfit is expected to generate 2.29 times more return on investment than Jazz Pharmaceuticals. However, Genfit is 2.29 times more volatile than Jazz Pharmaceuticals PLC. It trades about 0.03 of its potential returns per unit of risk. Jazz Pharmaceuticals PLC is currently generating about 0.01 per unit of risk. If you would invest  343.00  in Genfit on October 5, 2024 and sell it today you would earn a total of  40.00  from holding Genfit or generate 11.66% return on investment over 90 days.

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

Genfit  vs.  Jazz Pharmaceuticals PLC

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Jazz Pharmaceuticals PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jazz Pharmaceuticals PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Jazz Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genfit and Jazz Pharmaceuticals

The main advantage of trading using opposite Genfit and Jazz Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genfit position performs unexpectedly, Jazz Pharmaceuticals 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 Jazz Pharmaceuticals will offset losses from the drop in Jazz Pharmaceuticals' long position.

The idea behind Genfit and Jazz Pharmaceuticals PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.