Correlation Between Inventiva and GlycoMimetics

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

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

Diversification Opportunities for Inventiva and GlycoMimetics

0.66

Correlation Coefficient

Inventiva  GlycoMimetics

Poor diversification

The 3 months correlation between Inventiva and GlycoMimetics is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and GlycoMimetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlycoMimetics 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 GlycoMimetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlycoMimetics has no effect on the direction of Inventiva i.e., Inventiva and GlycoMimetics go up and down completely randomly.

Pair Corralation between Inventiva and GlycoMimetics

Considering the 90-day investment horizon Inventiva is expected to generate 7.97 times less return on investment than GlycoMimetics. But when comparing it to its historical volatility, Inventiva Sa is 3.66 times less risky than GlycoMimetics. It trades about 0.04 of its potential returns per unit of risk. GlycoMimetics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16.00  in GlycoMimetics on September 18, 2024 and sell it today you would earn a total of  7.31  from holding GlycoMimetics or generate 45.69% return on investment over 90 days.

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

Inventiva Sa  vs.  GlycoMimetics

Inventiva Sa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

GlycoMimetics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GlycoMimetics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, GlycoMimetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inventiva and GlycoMimetics

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

The idea behind Inventiva Sa and GlycoMimetics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.