Correlation Between Innate Pharma and DiaMedica Therapeutics
Can any of the company-specific risk be diversified away by investing in both Innate Pharma and DiaMedica Therapeutics 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 DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innate Pharma and DiaMedica Therapeutics, you can compare the effects of market volatilities on Innate Pharma and DiaMedica Therapeutics 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 DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innate Pharma and DiaMedica Therapeutics.
Diversification Opportunities for Innate Pharma and DiaMedica Therapeutics
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Innate and DiaMedica is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Innate Pharma and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics 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 DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Innate Pharma i.e., Innate Pharma and DiaMedica Therapeutics go up and down completely randomly.
Pair Corralation between Innate Pharma and DiaMedica Therapeutics
Given the investment horizon of 90 days Innate Pharma is expected to generate 2.63 times more return on investment than DiaMedica Therapeutics. However, Innate Pharma is 2.63 times more volatile than DiaMedica Therapeutics. It trades about 0.2 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.1 per unit of risk. If you would invest 176.00 in Innate Pharma on November 29, 2024 and sell it today you would earn a total of 50.00 from holding Innate Pharma or generate 28.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innate Pharma vs. DiaMedica Therapeutics
Performance |
| Timeline |
| Innate Pharma |
| DiaMedica Therapeutics |
Innate Pharma and DiaMedica Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innate Pharma and DiaMedica Therapeutics
The main advantage of trading using opposite Innate Pharma and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innate Pharma position performs unexpectedly, DiaMedica Therapeutics 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.| Innate Pharma vs. HCW Biologics | Innate Pharma vs. Inhibrx | Innate Pharma vs. Anebulo Pharmaceuticals | Innate Pharma vs. Shattuck Labs |
| DiaMedica Therapeutics vs. Milestone Pharmaceuticals | DiaMedica Therapeutics vs. Seres Therapeutics | DiaMedica Therapeutics vs. Inhibikase Therapeutics | DiaMedica Therapeutics vs. Oncolytics Biotech |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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