Correlation Between Ipsen SA and SPORTING

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

By analyzing existing cross correlation between Ipsen SA and SPORTING, you can compare the effects of market volatilities on Ipsen SA and SPORTING 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 Ipsen SA with a short position of SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and SPORTING.

Diversification Opportunities for Ipsen SA and SPORTING

-0.52

Correlation Coefficient

Ipsen SA  SPORTING

Excellent diversification

The 3 months correlation between Ipsen and SPORTING is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING and Ipsen SA 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 Ipsen SA are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Ipsen SA i.e., Ipsen SA and SPORTING go up and down completely randomly.

Pair Corralation between Ipsen SA and SPORTING

Assuming the 90 days trading horizon Ipsen SA is expected to generate 0.43 times more return on investment than SPORTING. However, Ipsen SA is 2.32 times less risky than SPORTING. It trades about 0.02 of its potential returns per unit of risk. SPORTING is currently generating about -0.01 per unit of risk. If you would invest  10,940  in Ipsen SA on December 22, 2024 and sell it today you would earn a total of  170.00  from holding Ipsen SA or generate 1.55% return on investment over 90 days.

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

Ipsen SA  vs.  SPORTING

Ipsen SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ipsen SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPORTING

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SPORTING is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ipsen SA and SPORTING

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

The idea behind Ipsen SA and SPORTING 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.