Correlation Between Innate Pharma and AIM ImmunoTech

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

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

Diversification Opportunities for Innate Pharma and AIM ImmunoTech

-0.6

Correlation Coefficient

Innate Pharma  AIM ImmunoTech

Excellent diversification

The 3 months correlation between Innate and AIM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and AIM ImmunoTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ImmunoTech 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 AIM ImmunoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ImmunoTech has no effect on the direction of Innate Pharma i.e., Innate Pharma and AIM ImmunoTech go up and down completely randomly.

Pair Corralation between Innate Pharma and AIM ImmunoTech

Given the investment horizon of 90 days Innate Pharma is expected to generate 0.78 times more return on investment than AIM ImmunoTech. However, Innate Pharma is 1.28 times less risky than AIM ImmunoTech. It trades about 0.0 of its potential returns per unit of risk. AIM ImmunoTech is currently generating about -0.1 per unit of risk. If you would invest  216.00  in Innate Pharma on December 18, 2024 and sell it today you would lose (14.00) from holding Innate Pharma or give up 6.48% of portfolio value over 90 days.

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

Innate Pharma  vs.  AIM ImmunoTech

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 recent stock price disturbance, may contribute to short-term losses for the investors.

AIM ImmunoTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days AIM ImmunoTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Innate Pharma and AIM ImmunoTech

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

The idea behind Innate Pharma and AIM ImmunoTech 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.