Correlation Between Ipsen SA and TRI CHEMICAL

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

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

Diversification Opportunities for Ipsen SA and TRI CHEMICAL

0.4

Correlation Coefficient

Ipsen SA  TRI CHEMICAL

Very weak diversification

The 3 months correlation between Ipsen and TRI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and TRI CHEMICAL LABORATINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRI CHEMICAL LABORATINC 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 TRI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRI CHEMICAL LABORATINC has no effect on the direction of Ipsen SA i.e., Ipsen SA and TRI CHEMICAL go up and down completely randomly.

Pair Corralation between Ipsen SA and TRI CHEMICAL

Assuming the 90 days horizon Ipsen SA is expected to generate 2.46 times less return on investment than TRI CHEMICAL. But when comparing it to its historical volatility, Ipsen SA is 2.0 times less risky than TRI CHEMICAL. It trades about 0.02 of its potential returns per unit of risk. TRI CHEMICAL LABORATINC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,487  in TRI CHEMICAL LABORATINC on October 5, 2024 and sell it today you would earn a total of  243.00  from holding TRI CHEMICAL LABORATINC or generate 16.34% return on investment over 90 days.

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

Ipsen SA  vs.  TRI CHEMICAL LABORATINC

Ipsen SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsen SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ipsen SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRI CHEMICAL LABORATINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ipsen SA and TRI CHEMICAL

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

The idea behind Ipsen SA and TRI CHEMICAL LABORATINC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.