Correlation Between Inventiva and Tempest Therapeutics

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

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

Diversification Opportunities for Inventiva and Tempest Therapeutics

-0.77

Correlation Coefficient

Inventiva  Tempest Therapeutics

Pay attention - limited upside

The 3 months correlation between Inventiva and Tempest is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and Tempest Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempest Therapeutics 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 Tempest Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempest Therapeutics has no effect on the direction of Inventiva i.e., Inventiva and Tempest Therapeutics go up and down completely randomly.

Pair Corralation between Inventiva and Tempest Therapeutics

Considering the 90-day investment horizon Inventiva Sa is expected to generate 1.42 times more return on investment than Tempest Therapeutics. However, Inventiva is 1.42 times more volatile than Tempest Therapeutics. It trades about 0.06 of its potential returns per unit of risk. Tempest Therapeutics is currently generating about -0.19 per unit of risk. If you would invest  218.00  in Inventiva Sa on September 17, 2024 and sell it today you would earn a total of  27.00  from holding Inventiva Sa or generate 12.39% return on investment over 90 days.

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

Inventiva Sa  vs.  Tempest Therapeutics

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

Tempest Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempest Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Inventiva and Tempest Therapeutics

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

The idea behind Inventiva Sa and Tempest 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..