Correlation Between Inter Parfums and Fulcrum Therapeutics

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

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

Diversification Opportunities for Inter Parfums and Fulcrum Therapeutics

0.47

Correlation Coefficient

Inter Parfums  Fulcrum Therapeutics

Very weak diversification

The 3 months correlation between Inter and Fulcrum is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Fulcrum Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Therapeutics and Inter Parfums 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 Inter Parfums are associated (or correlated) with Fulcrum Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Therapeutics has no effect on the direction of Inter Parfums i.e., Inter Parfums and Fulcrum Therapeutics go up and down completely randomly.

Pair Corralation between Inter Parfums and Fulcrum Therapeutics

Given the investment horizon of 90 days Inter Parfums is expected to under-perform the Fulcrum Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Inter Parfums is 2.91 times less risky than Fulcrum Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Fulcrum Therapeutics is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Fulcrum Therapeutics on October 7, 2024 and sell it today you would lose (417.00) from holding Fulcrum Therapeutics or give up 45.08% of portfolio value over 90 days.

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

Inter Parfums  vs.  Fulcrum Therapeutics

Inter Parfums

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Inter Parfums may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fulcrum Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inter Parfums and Fulcrum Therapeutics

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

The idea behind Inter Parfums and Fulcrum Therapeutics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.