Correlation Between Orchestra BioMed and Innate Pharma

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

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

Diversification Opportunities for Orchestra BioMed and Innate Pharma

0.55

Correlation Coefficient

Orchestra BioMed  Innate Pharma

Very weak diversification

The 3 months correlation between Orchestra and Innate is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Orchestra BioMed Holdings and Innate Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innate Pharma and Orchestra BioMed 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 Orchestra BioMed Holdings 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 Orchestra BioMed i.e., Orchestra BioMed and Innate Pharma go up and down completely randomly.

Pair Corralation between Orchestra BioMed and Innate Pharma

Given the investment horizon of 90 days Orchestra BioMed is expected to generate 1.01 times less return on investment than Innate Pharma. In addition to that, Orchestra BioMed is 1.37 times more volatile than Innate Pharma. It trades about 0.01 of its total potential returns per unit of risk. Innate Pharma is currently generating about 0.02 per unit of volatility. If you would invest  300.00  in Innate Pharma on February 4, 2024 and sell it today you would lose (45.00) from holding Innate Pharma or give up 15.0% of portfolio value over 90 days.

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

Orchestra BioMed Holdings  vs.  Innate Pharma

Orchestra BioMed Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orchestra BioMed Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in June 2024. 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 somewhat strong technical indicators, Innate Pharma is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orchestra BioMed and Innate Pharma

The main advantage of trading using opposite Orchestra BioMed and Innate Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchestra BioMed 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 Orchestra BioMed Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.