Correlation Between Innate Pharma and Solocal Group
Can any of the company-specific risk be diversified away by investing in both Innate Pharma and Solocal Group 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 Solocal Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innate Pharma and Solocal Group SA, you can compare the effects of market volatilities on Innate Pharma and Solocal Group 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 Solocal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innate Pharma and Solocal Group.
Diversification Opportunities for Innate Pharma and Solocal Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innate and Solocal is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Solocal Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solocal Group SA 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 Solocal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solocal Group SA has no effect on the direction of Innate Pharma i.e., Innate Pharma and Solocal Group go up and down completely randomly.
Pair Corralation between Innate Pharma and Solocal Group
Assuming the 90 days trading horizon Innate Pharma is expected to under-perform the Solocal Group. But the stock apears to be less risky and, when comparing its historical volatility, Innate Pharma is 1.46 times less risky than Solocal Group. The stock trades about -0.14 of its potential returns per unit of risk. The Solocal Group SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 230.00 in Solocal Group SA on August 26, 2024 and sell it today you would earn a total of 59.00 from holding Solocal Group SA or generate 25.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innate Pharma vs. Solocal Group SA
Performance |
| Timeline |
| Innate Pharma |
| Solocal Group SA |
Innate Pharma and Solocal Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innate Pharma and Solocal Group
The main advantage of trading using opposite Innate Pharma and Solocal Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innate Pharma position performs unexpectedly, Solocal Group 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 Solocal Group will offset losses from the drop in Solocal Group's long position.| Innate Pharma vs. Biomerieux SA | Innate Pharma vs. Eurofins Scientific SE | Innate Pharma vs. Sartorius Stedim Biotech | Innate Pharma vs. SEB SA |
| Solocal Group vs. Vallourec | Solocal Group vs. Genfit | Solocal Group vs. Innate Pharma | Solocal Group vs. Etablissements Maurel et |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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