Correlation Between Soleno Therapeutics and Genfit

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

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

Diversification Opportunities for Soleno Therapeutics and Genfit

0.26

Correlation Coefficient

Soleno Therapeutics  Genfit

Modest diversification

The 3 months correlation between Soleno and Genfit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Soleno Therapeutics and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and Soleno Therapeutics 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 Soleno Therapeutics are associated (or correlated) with Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Soleno Therapeutics i.e., Soleno Therapeutics and Genfit go up and down completely randomly.

Pair Corralation between Soleno Therapeutics and Genfit

Given the investment horizon of 90 days Soleno Therapeutics is expected to generate 0.68 times more return on investment than Genfit. However, Soleno Therapeutics is 1.47 times less risky than Genfit. It trades about 0.07 of its potential returns per unit of risk. Genfit is currently generating about 0.03 per unit of risk. If you would invest  4,727  in Soleno Therapeutics on September 3, 2024 and sell it today you would earn a total of  544.00  from holding Soleno Therapeutics or generate 11.51% return on investment over 90 days.

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

Soleno Therapeutics  vs.  Genfit

Soleno Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

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

Genfit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genfit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Genfit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Soleno Therapeutics and Genfit

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

The idea behind Soleno Therapeutics and Genfit 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.