Correlation Between Ipsen SA and Virbac SA

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Can any of the company-specific risk be diversified away by investing in both Ipsen SA and Virbac SA 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 Ipsen SA and Virbac SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ipsen SA and Virbac SA, you can compare the effects of market volatilities on Ipsen SA and Virbac SA 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 Ipsen SA with a short position of Virbac SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ipsen SA and Virbac SA.

Diversification Opportunities for Ipsen SA and Virbac SA

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Ipsen and Virbac is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ipsen SA and Virbac SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virbac SA and Ipsen SA 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 Ipsen SA are associated (or correlated) with Virbac SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virbac SA has no effect on the direction of Ipsen SA i.e., Ipsen SA and Virbac SA go up and down completely randomly.

Pair Corralation between Ipsen SA and Virbac SA

Assuming the 90 days trading horizon Ipsen SA is expected to generate 1.22 times more return on investment than Virbac SA. However, Ipsen SA is 1.22 times more volatile than Virbac SA. It trades about 0.3 of its potential returns per unit of risk. Virbac SA is currently generating about -0.2 per unit of risk. If you would invest  11,060  in Ipsen SA on October 26, 2024 and sell it today you would earn a total of  910.00  from holding Ipsen SA or generate 8.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ipsen SA  vs.  Virbac SA

 Performance 
       Timeline  
Ipsen SA 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ipsen SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Virbac SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Virbac SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ipsen SA and Virbac SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ipsen SA and Virbac SA

The main advantage of trading using opposite Ipsen SA and Virbac SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ipsen SA position performs unexpectedly, Virbac SA 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 Virbac SA will offset losses from the drop in Virbac SA's long position.
The idea behind Ipsen SA and Virbac 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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