Correlation Between Innate Pharma and Surrozen

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

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

Diversification Opportunities for Innate Pharma and Surrozen

0.14

Correlation Coefficient

Innate Pharma  Surrozen

Average diversification

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

Pair Corralation between Innate Pharma and Surrozen

Given the investment horizon of 90 days Innate Pharma is expected to generate 8.17 times less return on investment than Surrozen. But when comparing it to its historical volatility, Innate Pharma is 1.05 times less risky than Surrozen. It trades about 0.0 of its potential returns per unit of risk. Surrozen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,095  in Surrozen on October 24, 2024 and sell it today you would earn a total of  79.67  from holding Surrozen or generate 7.28% return on investment over 90 days.

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

Innate Pharma  vs.  Surrozen

Innate Pharma

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Innate Pharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical indicators, Innate Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Surrozen

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surrozen are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Surrozen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innate Pharma and Surrozen

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

The idea behind Innate Pharma and Surrozen 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.