Correlation Between Inventiva and Erasca

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

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

Diversification Opportunities for Inventiva and Erasca

0.33

Correlation Coefficient

Inventiva  Erasca

Weak diversification

The 3 months correlation between Inventiva and Erasca is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Inventiva 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 Inventiva Sa are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Inventiva i.e., Inventiva and Erasca go up and down completely randomly.

Pair Corralation between Inventiva and Erasca

Considering the 90-day investment horizon Inventiva Sa is expected to generate 1.58 times more return on investment than Erasca. However, Inventiva is 1.58 times more volatile than Erasca Inc. It trades about 0.06 of its potential returns per unit of risk. Erasca Inc is currently generating about 0.08 per unit of risk. If you would invest  229.00  in Inventiva Sa on September 4, 2024 and sell it today you would earn a total of  32.00  from holding Inventiva Sa or generate 13.97% return on investment over 90 days.

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

Inventiva Sa  vs.  Erasca Inc

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 conflicting basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

Erasca Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Erasca unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inventiva and Erasca

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

The idea behind Inventiva Sa and Erasca Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.