Correlation Between Ipsen SA and Guerbet S

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

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

Diversification Opportunities for Ipsen SA and Guerbet S

0.79

Correlation Coefficient

Ipsen SA  Guerbet S

Poor diversification

The 3 months correlation between Ipsen and Guerbet is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Guerbet S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerbet S A and Ipsen 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 Ipsen SA are associated (or correlated) with Guerbet S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerbet S A has no effect on the direction of Ipsen SA i.e., Ipsen SA and Guerbet S go up and down completely randomly.

Pair Corralation between Ipsen SA and Guerbet S

Assuming the 90 days trading horizon Ipsen SA is expected to generate 0.48 times more return on investment than Guerbet S. However, Ipsen SA is 2.1 times less risky than Guerbet S. It trades about -0.03 of its potential returns per unit of risk. Guerbet S A is currently generating about -0.21 per unit of risk. If you would invest  11,150  in Ipsen SA on September 27, 2024 and sell it today you would lose (290.00) from holding Ipsen SA or give up 2.6% of portfolio value over 90 days.

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

Ipsen SA  vs.  Guerbet S A

Ipsen SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsen SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ipsen SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Guerbet S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerbet S A 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.

Pair Trading with Ipsen SA and Guerbet S

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

The idea behind Ipsen SA and Guerbet S A 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.