Correlation Between Inventiva and Deezer SA

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

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

Diversification Opportunities for Inventiva and Deezer SA

-0.48

Correlation Coefficient

Inventiva  Deezer SA

Very good diversification

The 3 months correlation between Inventiva and Deezer is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva SA and Deezer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deezer SA and Inventiva 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 Inventiva SA are associated (or correlated) with Deezer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deezer SA has no effect on the direction of Inventiva i.e., Inventiva and Deezer SA go up and down completely randomly.

Pair Corralation between Inventiva and Deezer SA

Assuming the 90 days trading horizon Inventiva SA is expected to generate 1.33 times more return on investment than Deezer SA. However, Inventiva is 1.33 times more volatile than Deezer SA. It trades about -0.01 of its potential returns per unit of risk. Deezer SA is currently generating about -0.03 per unit of risk. If you would invest  486.00  in Inventiva SA on September 28, 2024 and sell it today you would lose (262.00) from holding Inventiva SA or give up 53.91% of portfolio value over 90 days.

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

Inventiva SA  vs.  Deezer SA

Inventiva SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

Deezer SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deezer 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 Inventiva and Deezer SA

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

The idea behind Inventiva SA and Deezer 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.