Correlation Between Genfit and TRACON Pharmaceuticals

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

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

Diversification Opportunities for Genfit and TRACON Pharmaceuticals

0.2

Correlation Coefficient

Genfit  TRACON Pharmaceuticals

Modest diversification

The 3 months correlation between Genfit and TRACON is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and TRACON Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRACON Pharmaceuticals 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 TRACON Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRACON Pharmaceuticals has no effect on the direction of Genfit i.e., Genfit and TRACON Pharmaceuticals go up and down completely randomly.

Pair Corralation between Genfit and TRACON Pharmaceuticals

Given the investment horizon of 90 days Genfit is expected to generate 26.78 times less return on investment than TRACON Pharmaceuticals. But when comparing it to its historical volatility, Genfit is 1.48 times less risky than TRACON Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. TRACON Pharmaceuticals is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  145.00  in TRACON Pharmaceuticals on September 24, 2024 and sell it today you would earn a total of  15.00  from holding TRACON Pharmaceuticals or generate 10.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	3.15%
Values	Daily Returns

Genfit  vs.  TRACON Pharmaceuticals

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TRACON Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRACON Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TRACON Pharmaceuticals is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Genfit and TRACON Pharmaceuticals

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

The idea behind Genfit and TRACON Pharmaceuticals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.