Correlation Between ONWARD MEDICAL and Ipsen SA

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

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

Diversification Opportunities for ONWARD MEDICAL and Ipsen SA

0.68

Correlation Coefficient

ONWARD MEDICAL  Ipsen SA

Poor diversification

The 3 months correlation between ONWARD and Ipsen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ONWARD MEDICAL BV and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA and ONWARD MEDICAL 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 ONWARD MEDICAL BV are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of ONWARD MEDICAL i.e., ONWARD MEDICAL and Ipsen SA go up and down completely randomly.

Pair Corralation between ONWARD MEDICAL and Ipsen SA

Assuming the 90 days horizon ONWARD MEDICAL BV is expected to under-perform the Ipsen SA. In addition to that, ONWARD MEDICAL is 1.64 times more volatile than Ipsen SA. It trades about -0.29 of its total potential returns per unit of risk. Ipsen SA is currently generating about -0.13 per unit of volatility. If you would invest  11,290  in Ipsen SA on September 5, 2024 and sell it today you would lose (460.00) from holding Ipsen SA or give up 4.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

ONWARD MEDICAL BV  vs.  Ipsen SA

ONWARD MEDICAL BV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ipsen SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ONWARD MEDICAL and Ipsen SA

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

The idea behind ONWARD MEDICAL BV and Ipsen 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.