Correlation Between Inventiva and GT Biopharma

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

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

Diversification Opportunities for Inventiva and GT Biopharma

-0.26

Correlation Coefficient

Inventiva  GT Biopharma

Very good diversification

The 3 months correlation between Inventiva and GTBP is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and GT Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GT Biopharma 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 GT Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GT Biopharma has no effect on the direction of Inventiva i.e., Inventiva and GT Biopharma go up and down completely randomly.

Pair Corralation between Inventiva and GT Biopharma

Considering the 90-day investment horizon Inventiva Sa is expected to generate 0.76 times more return on investment than GT Biopharma. However, Inventiva Sa is 1.31 times less risky than GT Biopharma. It trades about 0.13 of its potential returns per unit of risk. GT Biopharma is currently generating about -0.06 per unit of risk. If you would invest  227.00  in Inventiva Sa on December 29, 2024 and sell it today you would earn a total of  77.00  from holding Inventiva Sa or generate 33.92% return on investment over 90 days.

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

Inventiva Sa  vs.  GT Biopharma

Inventiva Sa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

GT Biopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days GT Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Inventiva and GT Biopharma

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

The idea behind Inventiva Sa and GT Biopharma 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.