Correlation Between Innate Pharma and Addex Therapeutics

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

By analyzing existing cross correlation between Innate Pharma and Addex Therapeutics, you can compare the effects of market volatilities on Innate Pharma and Addex Therapeutics 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 Addex Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innate Pharma and Addex Therapeutics.

Diversification Opportunities for Innate Pharma and Addex Therapeutics

0.53

Correlation Coefficient

Innate Pharma  Addex Therapeutics

Very weak diversification

The 3 months correlation between Innate and Addex is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Addex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addex Therapeutics 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 Addex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addex Therapeutics has no effect on the direction of Innate Pharma i.e., Innate Pharma and Addex Therapeutics go up and down completely randomly.

Pair Corralation between Innate Pharma and Addex Therapeutics

Given the investment horizon of 90 days Innate Pharma is expected to under-perform the Addex Therapeutics. In addition to that, Innate Pharma is 1.0 times more volatile than Addex Therapeutics. It trades about -0.1 of its total potential returns per unit of risk. Addex Therapeutics is currently generating about -0.06 per unit of volatility. If you would invest  1,148  in Addex Therapeutics on September 2, 2024 and sell it today you would lose (277.00) from holding Addex Therapeutics or give up 24.13% of portfolio value over 90 days.

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

Innate Pharma  vs.  Addex Therapeutics

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 unfluctuating 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.

Addex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addex Therapeutics 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Innate Pharma and Addex Therapeutics

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

The idea behind Innate Pharma and Addex Therapeutics 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.