Correlation Between Indivior PLC and Genomma Lab

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

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

Diversification Opportunities for Indivior PLC and Genomma Lab

0.89

Correlation Coefficient

Indivior PLC  Genomma Lab

Very poor diversification

The 3 months correlation between Indivior and Genomma is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Indivior PLC and Genomma Lab Internacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genomma Lab Internacional and Indivior PLC 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 Indivior PLC are associated (or correlated) with Genomma Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genomma Lab Internacional has no effect on the direction of Indivior PLC i.e., Indivior PLC and Genomma Lab go up and down completely randomly.

Pair Corralation between Indivior PLC and Genomma Lab

Assuming the 90 days horizon Indivior PLC is expected to generate 66.4 times less return on investment than Genomma Lab. But when comparing it to its historical volatility, Indivior PLC is 19.21 times less risky than Genomma Lab. It trades about 0.04 of its potential returns per unit of risk. Genomma Lab Internacional is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Genomma Lab Internacional on September 29, 2024 and sell it today you would earn a total of  43.00  from holding Genomma Lab Internacional or generate 51.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	47.06%
Values	Daily Returns

Indivior PLC  vs.  Genomma Lab Internacional

Indivior PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indivior PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indivior PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Genomma Lab Internacional

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Genomma Lab Internacional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent essential indicators, Genomma Lab reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indivior PLC and Genomma Lab

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

The idea behind Indivior PLC and Genomma Lab Internacional 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.