Correlation Between Neovacs SA and Biophytis

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

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

Diversification Opportunities for Neovacs SA and Biophytis

0.9

Correlation Coefficient

Neovacs SA  Biophytis

Almost no diversification

The 3 months correlation between Neovacs and Biophytis is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Neovacs SA and Biophytis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis SA and Neovacs SA 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 Neovacs SA are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis SA has no effect on the direction of Neovacs SA i.e., Neovacs SA and Biophytis go up and down completely randomly.

Pair Corralation between Neovacs SA and Biophytis

Assuming the 90 days trading horizon Neovacs SA is expected to generate 5.42 times more return on investment than Biophytis. However, Neovacs SA is 5.42 times more volatile than Biophytis SA. It trades about 0.03 of its potential returns per unit of risk. Biophytis SA is currently generating about -0.17 per unit of risk. If you would invest  0.07  in Neovacs SA on September 3, 2024 and sell it today you would lose (0.05) from holding Neovacs SA or give up 71.43% of portfolio value over 90 days.

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

Neovacs SA  vs.  Biophytis SA

Neovacs SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neovacs SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neovacs SA reported solid returns over the last few months and may actually be approaching a breakup point.

Biophytis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biophytis SA 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 basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Neovacs SA and Biophytis

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

The idea behind Neovacs SA and Biophytis 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..