Correlation Between Innate Pharma and Medincell

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

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

Diversification Opportunities for Innate Pharma and Medincell

-0.32

Correlation Coefficient

Innate Pharma  Medincell

Very good diversification

The 3 months correlation between Innate and Medincell is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Medincell SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medincell 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 Medincell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medincell SA has no effect on the direction of Innate Pharma i.e., Innate Pharma and Medincell go up and down completely randomly.

Pair Corralation between Innate Pharma and Medincell

Assuming the 90 days trading horizon Innate Pharma is expected to under-perform the Medincell. But the stock apears to be less risky and, when comparing its historical volatility, Innate Pharma is 1.05 times less risky than Medincell. The stock trades about -0.26 of its potential returns per unit of risk. The Medincell SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,846  in Medincell SA on September 5, 2024 and sell it today you would lose (190.00) from holding Medincell SA or give up 10.29% of portfolio value over 90 days.

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

Innate Pharma  vs.  Medincell SA

Innate Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innate Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Medincell SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medincell SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Innate Pharma and Medincell

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

The idea behind Innate Pharma and Medincell 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.