Correlation Between Innate Pharma and Gensight Biologics

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

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

Diversification Opportunities for Innate Pharma and Gensight Biologics

0.75

Correlation Coefficient

Innate Pharma  Gensight Biologics

Poor diversification

The 3 months correlation between Innate and Gensight is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Gensight Biologics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensight Biologics and Innate Pharma 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 Innate Pharma 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 Innate Pharma i.e., Innate Pharma and Gensight Biologics go up and down completely randomly.

Pair Corralation between Innate Pharma and Gensight Biologics

Assuming the 90 days trading horizon Innate Pharma is expected to under-perform the Gensight Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Innate Pharma is 1.45 times less risky than Gensight Biologics. The stock trades about -0.12 of its potential returns per unit of risk. The Gensight Biologics SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Gensight Biologics SA on September 13, 2024 and sell it today you would lose (6.00) from holding Gensight Biologics SA or give up 15.79% of portfolio value over 90 days.

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

Innate Pharma  vs.  Gensight Biologics SA

Innate Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innate Pharma 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 technical 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.

Gensight Biologics

Risk-Adjusted Performance

0 of 100

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 Innate Pharma and Gensight Biologics

The main advantage of trading using opposite Innate Pharma and Gensight Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innate Pharma 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 Innate Pharma 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.