Correlation Between Innate Pharma and Genfit

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

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

Diversification Opportunities for Innate Pharma and Genfit

0.36

Correlation Coefficient

Innate Pharma  Genfit

Weak diversification

The 3 months correlation between Innate and Genfit is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit 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 Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Innate Pharma i.e., Innate Pharma and Genfit go up and down completely randomly.

Pair Corralation between Innate Pharma and Genfit

Assuming the 90 days trading horizon Innate Pharma is expected to generate 1.52 times more return on investment than Genfit. However, Innate Pharma is 1.52 times more volatile than Genfit. It trades about -0.01 of its potential returns per unit of risk. Genfit is currently generating about -0.02 per unit of risk. If you would invest  194.00  in Innate Pharma on December 30, 2024 and sell it today you would lose (8.00) from holding Innate Pharma or give up 4.12% of portfolio value over 90 days.

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

Innate Pharma  vs.  Genfit

Innate Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innate Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Innate Pharma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Genfit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genfit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innate Pharma and Genfit

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

The idea behind Innate Pharma and Genfit 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.