Correlation Between Innate Pharma and Medesis Pharma

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

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

Diversification Opportunities for Innate Pharma and Medesis Pharma

-0.14

Correlation Coefficient

Innate Pharma  Medesis Pharma

Good diversification

The 3 months correlation between Innate and Medesis is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Medesis Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medesis Pharma SA and Innate Pharma 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 Innate Pharma are associated (or correlated) with Medesis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medesis Pharma SA has no effect on the direction of Innate Pharma i.e., Innate Pharma and Medesis Pharma go up and down completely randomly.

Pair Corralation between Innate Pharma and Medesis Pharma

Assuming the 90 days trading horizon Innate Pharma is expected to generate 2.31 times more return on investment than Medesis Pharma. However, Innate Pharma is 2.31 times more volatile than Medesis Pharma SA. It trades about 0.24 of its potential returns per unit of risk. Medesis Pharma SA is currently generating about 0.11 per unit of risk. If you would invest  143.00  in Innate Pharma on October 5, 2024 and sell it today you would earn a total of  48.00  from holding Innate Pharma or generate 33.57% return on investment over 90 days.

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

Innate Pharma  vs.  Medesis Pharma SA

Innate Pharma

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innate Pharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Innate Pharma is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Medesis Pharma SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medesis Pharma SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Medesis Pharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Innate Pharma and Medesis Pharma

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

The idea behind Innate Pharma and Medesis Pharma SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.