Correlation Between Albemarle and Genfit
Can any of the company-specific risk be diversified away by investing in both Albemarle 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 Albemarle and Genfit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albemarle and Genfit, you can compare the effects of market volatilities on Albemarle 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 Albemarle with a short position of Genfit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle and Genfit.
Diversification Opportunities for Albemarle and Genfit
Weak diversification
The 3 months correlation between Albemarle and Genfit is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and Albemarle 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 Albemarle 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 Albemarle i.e., Albemarle and Genfit go up and down completely randomly.
Pair Corralation between Albemarle and Genfit
Assuming the 90 days trading horizon Albemarle is expected to generate 0.7 times more return on investment than Genfit. However, Albemarle is 1.43 times less risky than Genfit. It trades about 0.03 of its potential returns per unit of risk. Genfit is currently generating about 0.01 per unit of risk. If you would invest 4,005 in Albemarle on November 2, 2024 and sell it today you would earn a total of 143.00 from holding Albemarle or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albemarle vs. Genfit
Performance |
| Timeline |
| Albemarle |
| Genfit |
Albemarle and Genfit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albemarle and Genfit
The main advantage of trading using opposite Albemarle and Genfit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albemarle 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.| Albemarle vs. Old Dominion Freight | Albemarle vs. East Africa Metals | Albemarle vs. United Guardian | Albemarle vs. Vindicator Silver Lead Mining |
| Genfit vs. HCW Biologics | Genfit vs. Molecular Partners AG | Genfit vs. MediciNova | Genfit vs. Anebulo Pharmaceuticals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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