Correlation Between LNA Sante and Biophytis
Can any of the company-specific risk be diversified away by investing in both LNA Sante and Biophytis 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 LNA Sante and Biophytis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LNA Sante SA and Biophytis SA, you can compare the effects of market volatilities on LNA Sante and Biophytis 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 LNA Sante with a short position of Biophytis. Check out your portfolio center. Please also check ongoing floating volatility patterns of LNA Sante and Biophytis.
Diversification Opportunities for LNA Sante and Biophytis
Very good diversification
The 3 months correlation between LNA and Biophytis is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LNA Sante SA and Biophytis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biophytis SA and LNA Sante 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 LNA Sante SA are associated (or correlated) with Biophytis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biophytis SA has no effect on the direction of LNA Sante i.e., LNA Sante and Biophytis go up and down completely randomly.
Pair Corralation between LNA Sante and Biophytis
Assuming the 90 days trading horizon LNA Sante SA is expected to under-perform the Biophytis. But the stock apears to be less risky and, when comparing its historical volatility, LNA Sante SA is 2.17 times less risky than Biophytis. The stock trades about -0.13 of its potential returns per unit of risk. The Biophytis SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Biophytis SA on September 4, 2024 and sell it today you would lose (1.00) from holding Biophytis SA or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LNA Sante SA vs. Biophytis SA
Performance |
| Timeline |
| LNA Sante SA |
| Biophytis SA |
LNA Sante and Biophytis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LNA Sante and Biophytis
The main advantage of trading using opposite LNA Sante and Biophytis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LNA Sante position performs unexpectedly, Biophytis 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 Biophytis will offset losses from the drop in Biophytis' long position.The idea behind LNA Sante SA and Biophytis 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.| Biophytis vs. Novacyt | Biophytis vs. Biosynex | Biophytis vs. Neovacs SA | Biophytis vs. Quantum Genomics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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