Correlation Between Innate Pharma and Bilendi
Can any of the company-specific risk be diversified away by investing in both Innate Pharma and Bilendi 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 Innate Pharma and Bilendi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innate Pharma and Bilendi, you can compare the effects of market volatilities on Innate Pharma and Bilendi 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 Innate Pharma with a short position of Bilendi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innate Pharma and Bilendi.
Diversification Opportunities for Innate Pharma and Bilendi
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innate and Bilendi is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Bilendi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilendi and Innate Pharma 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 Innate Pharma are associated (or correlated) with Bilendi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilendi has no effect on the direction of Innate Pharma i.e., Innate Pharma and Bilendi go up and down completely randomly.
Pair Corralation between Innate Pharma and Bilendi
Assuming the 90 days trading horizon Innate Pharma is expected to under-perform the Bilendi. In addition to that, Innate Pharma is 1.58 times more volatile than Bilendi. It trades about -0.22 of its total potential returns per unit of risk. Bilendi is currently generating about -0.19 per unit of volatility. If you would invest 1,555 in Bilendi on August 30, 2024 and sell it today you would lose (140.00) from holding Bilendi or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innate Pharma vs. Bilendi
Performance |
| Timeline |
| Innate Pharma |
| Bilendi |
Innate Pharma and Bilendi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innate Pharma and Bilendi
The main advantage of trading using opposite Innate Pharma and Bilendi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innate Pharma position performs unexpectedly, Bilendi 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 Bilendi will offset losses from the drop in Bilendi's long position.The idea behind Innate Pharma and Bilendi 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.| Bilendi vs. Hotelim Socit Anonyme | Bilendi vs. Gaztransport Technigaz SAS | Bilendi vs. Hotel Majestic Cannes | Bilendi vs. ZCCM Investments Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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