Correlation Between Invion and Ipsen SA
Can any of the company-specific risk be diversified away by investing in both Invion and Ipsen SA 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 Invion and Ipsen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invion Limited and Ipsen SA, you can compare the effects of market volatilities on Invion and Ipsen SA 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 Invion with a short position of Ipsen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invion and Ipsen SA.
Diversification Opportunities for Invion and Ipsen SA
Significant diversification
The 3 months correlation between Invion and Ipsen is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Invion Limited and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA and Invion 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 Invion Limited are associated (or correlated) with Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of Invion i.e., Invion and Ipsen SA go up and down completely randomly.
Pair Corralation between Invion and Ipsen SA
Assuming the 90 days horizon Invion Limited is expected to generate 11.78 times more return on investment than Ipsen SA. However, Invion is 11.78 times more volatile than Ipsen SA. It trades about 0.16 of its potential returns per unit of risk. Ipsen SA is currently generating about 0.31 per unit of risk. If you would invest 14.00 in Invion Limited on October 10, 2024 and sell it today you would earn a total of 4.00 from holding Invion Limited or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invion Limited vs. Ipsen SA
Performance |
| Timeline |
| Invion Limited |
| Ipsen SA |
Invion and Ipsen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invion and Ipsen SA
The main advantage of trading using opposite Invion and Ipsen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invion position performs unexpectedly, Ipsen SA 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 Ipsen SA will offset losses from the drop in Ipsen SA's long position.| Invion vs. Nok Airlines PCL | Invion vs. Gol Intelligent Airlines | Invion vs. Nippon Steel | Invion vs. MOUNT GIBSON IRON |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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