Correlation Between Intertech and Lavipharm

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

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

Diversification Opportunities for Intertech and Lavipharm

0.84

Correlation Coefficient

Intertech  Lavipharm

Very poor diversification

The 3 months correlation between Intertech and Lavipharm is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Intertech SA Inter and Lavipharm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavipharm SA and Intertech 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 Intertech SA Inter are associated (or correlated) with Lavipharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavipharm SA has no effect on the direction of Intertech i.e., Intertech and Lavipharm go up and down completely randomly.

Pair Corralation between Intertech and Lavipharm

Assuming the 90 days trading horizon Intertech SA Inter is expected to under-perform the Lavipharm. In addition to that, Intertech is 1.3 times more volatile than Lavipharm SA. It trades about -0.11 of its total potential returns per unit of risk. Lavipharm SA is currently generating about -0.11 per unit of volatility. If you would invest  83.00  in Lavipharm SA on September 5, 2024 and sell it today you would lose (11.00) from holding Lavipharm SA or give up 13.25% of portfolio value over 90 days.

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

Intertech SA Inter  vs.  Lavipharm SA

Intertech SA Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertech SA Inter has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Lavipharm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavipharm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Intertech and Lavipharm

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

The idea behind Intertech SA Inter and Lavipharm 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.