Correlation Between Addex Therapeutics and Innate Pharma

Can any of the company-specific risk be diversified away by investing in both Addex Therapeutics and Innate Pharma 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 Addex Therapeutics and Innate Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addex Therapeutics and Innate Pharma, you can compare the effects of market volatilities on Addex Therapeutics and Innate Pharma 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 Addex Therapeutics with a short position of Innate Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addex Therapeutics and Innate Pharma.

Diversification Opportunities for Addex Therapeutics and Innate Pharma

0.58

Correlation Coefficient

Addex Therapeutics  Innate Pharma

Very weak diversification

The 3 months correlation between Addex and Innate is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Addex Therapeutics and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma and Addex Therapeutics 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 Addex Therapeutics are associated (or correlated) with Innate Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innate Pharma has no effect on the direction of Addex Therapeutics i.e., Addex Therapeutics and Innate Pharma go up and down completely randomly.

Pair Corralation between Addex Therapeutics and Innate Pharma

Given the investment horizon of 90 days Addex Therapeutics is expected to under-perform the Innate Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Addex Therapeutics is 1.61 times less risky than Innate Pharma. The stock trades about -0.04 of its potential returns per unit of risk. The Innate Pharma is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Innate Pharma on September 14, 2024 and sell it today you would lose (13.00) from holding Innate Pharma or give up 7.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Addex Therapeutics  vs.  Innate Pharma

Addex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Innate Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Addex Therapeutics and Innate Pharma

The main advantage of trading using opposite Addex Therapeutics and Innate Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addex Therapeutics position performs unexpectedly, Innate Pharma 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 Innate Pharma will offset losses from the drop in Innate Pharma's long position.

The idea behind Addex Therapeutics and Innate Pharma 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.