Correlation Between Transgene and Gensight Biologics

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

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

Diversification Opportunities for Transgene and Gensight Biologics

0.31

Correlation Coefficient

Transgene  Gensight Biologics

Weak diversification

The 3 months correlation between Transgene and Gensight is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Transgene SA and Gensight Biologics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensight Biologics and Transgene 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 Transgene SA are associated (or correlated) with Gensight Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensight Biologics has no effect on the direction of Transgene i.e., Transgene and Gensight Biologics go up and down completely randomly.

Pair Corralation between Transgene and Gensight Biologics

Assuming the 90 days trading horizon Transgene SA is expected to generate 0.46 times more return on investment than Gensight Biologics. However, Transgene SA is 2.16 times less risky than Gensight Biologics. It trades about -0.03 of its potential returns per unit of risk. Gensight Biologics SA is currently generating about -0.03 per unit of risk. If you would invest  70.00  in Transgene SA on December 27, 2024 and sell it today you would lose (4.00) from holding Transgene SA or give up 5.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Transgene SA  vs.  Gensight Biologics SA

Transgene SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transgene SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Transgene is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gensight Biologics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gensight Biologics 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 Transgene and Gensight Biologics

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

The idea behind Transgene SA and Gensight Biologics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.