Correlation Between Europlasma and Gensight Biologics
Can any of the company-specific risk be diversified away by investing in both Europlasma and Gensight Biologics 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 Europlasma and Gensight Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europlasma SA and Gensight Biologics SA, you can compare the effects of market volatilities on Europlasma and Gensight Biologics 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 Europlasma with a short position of Gensight Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europlasma and Gensight Biologics.
Diversification Opportunities for Europlasma and Gensight Biologics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europlasma and Gensight is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Gensight Biologics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensight Biologics and Europlasma 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 Europlasma SA are associated (or correlated) with Gensight Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensight Biologics has no effect on the direction of Europlasma i.e., Europlasma and Gensight Biologics go up and down completely randomly.
Pair Corralation between Europlasma and Gensight Biologics
Assuming the 90 days trading horizon Europlasma SA is expected to generate 6.23 times more return on investment than Gensight Biologics. However, Europlasma is 6.23 times more volatile than Gensight Biologics SA. It trades about 0.15 of its potential returns per unit of risk. Gensight Biologics SA is currently generating about 0.19 per unit of risk. If you would invest 6.55 in Europlasma SA on September 2, 2024 and sell it today you would earn a total of 2.95 from holding Europlasma SA or generate 45.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europlasma SA vs. Gensight Biologics SA
Performance |
| Timeline |
| Europlasma SA |
| Gensight Biologics |
Europlasma and Gensight Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europlasma and Gensight Biologics
The main advantage of trading using opposite Europlasma and Gensight Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europlasma position performs unexpectedly, Gensight Biologics 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 Gensight Biologics will offset losses from the drop in Gensight Biologics' long position.The idea behind Europlasma SA and Gensight Biologics SA 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.| Gensight Biologics vs. Europlasma SA | Gensight Biologics vs. Cellectis | Gensight Biologics vs. Innate Pharma |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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