Correlation Between Spineway and Biophytis
Can any of the company-specific risk be diversified away by investing in both Spineway and Biophytis 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 Spineway and Biophytis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spineway and Biophytis SA, you can compare the effects of market volatilities on Spineway and Biophytis 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 Spineway with a short position of Biophytis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spineway and Biophytis.
Diversification Opportunities for Spineway and Biophytis
Almost no diversification
The 3 months correlation between Spineway and Biophytis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Spineway and Biophytis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis SA and Spineway 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 Spineway are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis SA has no effect on the direction of Spineway i.e., Spineway and Biophytis go up and down completely randomly.
Pair Corralation between Spineway and Biophytis
Assuming the 90 days trading horizon Spineway is expected to generate 3.3 times more return on investment than Biophytis. However, Spineway is 3.3 times more volatile than Biophytis SA. It trades about 0.02 of its potential returns per unit of risk. Biophytis SA is currently generating about 0.05 per unit of risk. If you would invest 14.00 in Spineway on September 5, 2024 and sell it today you would lose (2.00) from holding Spineway or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spineway vs. Biophytis SA
Performance |
| Timeline |
| Spineway |
| Biophytis SA |
Spineway and Biophytis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spineway and Biophytis
The main advantage of trading using opposite Spineway and Biophytis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spineway position performs unexpectedly, Biophytis 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 Biophytis will offset losses from the drop in Biophytis' long position.The idea behind Spineway and Biophytis 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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