Correlation Between Innate Pharma and Vallourec
Can any of the company-specific risk be diversified away by investing in both Innate Pharma and Vallourec 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 Vallourec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innate Pharma and Vallourec, you can compare the effects of market volatilities on Innate Pharma and Vallourec 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 Vallourec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innate Pharma and Vallourec.
Diversification Opportunities for Innate Pharma and Vallourec
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Innate and Vallourec is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec 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 Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Innate Pharma i.e., Innate Pharma and Vallourec go up and down completely randomly.
Pair Corralation between Innate Pharma and Vallourec
Assuming the 90 days trading horizon Innate Pharma is expected to under-perform the Vallourec. In addition to that, Innate Pharma is 1.19 times more volatile than Vallourec. It trades about -0.18 of its total potential returns per unit of risk. Vallourec is currently generating about 0.02 per unit of volatility. If you would invest 1,633 in Vallourec on August 29, 2024 and sell it today you would earn a total of 37.00 from holding Vallourec or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innate Pharma vs. Vallourec
Performance |
| Timeline |
| Innate Pharma |
| Vallourec |
Innate Pharma and Vallourec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innate Pharma and Vallourec
The main advantage of trading using opposite Innate Pharma and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innate Pharma position performs unexpectedly, Vallourec 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 Vallourec will offset losses from the drop in Vallourec's long position.| Innate Pharma vs. Genfit | Innate Pharma vs. Nanobiotix SA | Innate Pharma vs. Cellectis | Innate Pharma vs. AB Science SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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