Can any of the company-specific risk be diversified away by investing in both Regeneron Pharmaceuticals and ABIVAX Socit 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 Regeneron Pharmaceuticals and ABIVAX Socit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regeneron Pharmaceuticals and ABIVAX Socit Anonyme, you can compare the effects of market volatilities on Regeneron Pharmaceuticals and ABIVAX Socit 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 Regeneron Pharmaceuticals with a short position of ABIVAX Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regeneron Pharmaceuticals and ABIVAX Socit.
Diversification Opportunities for Regeneron Pharmaceuticals and ABIVAX Socit
The 3 months correlation between Regeneron and ABIVAX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regeneron Pharmaceuticals and ABIVAX Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABIVAX Socit Anonyme and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals are associated (or correlated) with ABIVAX Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABIVAX Socit Anonyme has no effect on the direction of Regeneron Pharmaceuticals i.e., Regeneron Pharmaceuticals and ABIVAX Socit go up and down completely randomly.
Pair Corralation between Regeneron Pharmaceuticals and ABIVAX Socit
Given the investment horizon of 90 days Regeneron Pharmaceuticals is expected to generate 0.4 times more return on investment than ABIVAX Socit. However, Regeneron Pharmaceuticals is 2.48 times less risky than ABIVAX Socit. It trades about 0.01 of its potential returns per unit of risk. ABIVAX Socit Anonyme is currently generating about -0.21 per unit of risk. If you would invest 83,089 in Regeneron Pharmaceuticals on June 29, 2023 and sell it today you would earn a total of 152.00 from holding Regeneron Pharmaceuticals or generate 0.18% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Regeneron Pharmaceuticals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Regeneron Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.
Compared to the overall equity markets, risk-adjusted returns on investments in ABIVAX Socit Anonyme are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, ABIVAX Socit reported solid returns over the last few months and may actually be approaching a breakup point.
Regeneron Pharmaceuticals and ABIVAX Socit Volatility Contrast
Predicted Return Density
Pair Trading with Regeneron Pharmaceuticals and ABIVAX Socit
The main advantage of trading using opposite Regeneron Pharmaceuticals and ABIVAX Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regeneron Pharmaceuticals position performs unexpectedly, ABIVAX Socit 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 ABIVAX Socit will offset losses from the drop in ABIVAX Socit's long position.
The idea behind Regeneron Pharmaceuticals and ABIVAX Socit Anonyme 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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