Correlation Between Biocardia and Inventiva

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

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

Diversification Opportunities for Biocardia and Inventiva

-0.69

Correlation Coefficient

Biocardia  Inventiva

Excellent diversification

The 3 months correlation between Biocardia and Inventiva is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Inventiva Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventiva Sa and Biocardia 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 Biocardia are associated (or correlated) with Inventiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventiva Sa has no effect on the direction of Biocardia i.e., Biocardia and Inventiva go up and down completely randomly.

Pair Corralation between Biocardia and Inventiva

Given the investment horizon of 90 days Biocardia is expected to generate 3.6 times more return on investment than Inventiva. However, Biocardia is 3.6 times more volatile than Inventiva Sa. It trades about 0.14 of its potential returns per unit of risk. Inventiva Sa is currently generating about -0.38 per unit of risk. If you would invest  185.00  in Biocardia on September 16, 2024 and sell it today you would earn a total of  23.00  from holding Biocardia or generate 12.43% return on investment over 90 days.

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

Biocardia  vs.  Inventiva Sa

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Inventiva Sa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 4 (%) 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.

Pair Trading with Biocardia and Inventiva

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

The idea behind Biocardia and Inventiva 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.