Correlation Between Dassault Systemes and Liquidia Technologies

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

Diversification Opportunities for Dassault Systemes and Liquidia Technologies

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dassault and Liquidia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SA and Liquidia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidia Technologies and Dassault Systemes 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 Dassault Systemes SA are associated (or correlated) with Liquidia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidia Technologies has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Liquidia Technologies go up and down completely randomly.

Pair Corralation between Dassault Systemes and Liquidia Technologies

Assuming the 90 days horizon Dassault Systemes SA is expected to under-perform the Liquidia Technologies. But the otc pink sheet apears to be less risky and, when comparing its historical volatility, Dassault Systemes SA is 2.7 times less risky than Liquidia Technologies. The otc pink sheet trades about -0.06 of its potential returns per unit of risk. The Liquidia Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Liquidia Technologies on September 4, 2022 and sell it today you would earn a total of  108.00  from holding Liquidia Technologies or generate 24.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Dassault Systemes SA  vs.  Liquidia Technologies

 Performance (%) 
       Timeline  
Dassault Systemes 
Dassault Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systemes SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dassault Systemes is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Dassault Price Channel

Liquidia Technologies 
Liquidia Performance
0 of 100
Over the last 90 days Liquidia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Liquidia Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Liquidia Price Channel

Dassault Systemes and Liquidia Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dassault Systemes and Liquidia Technologies

The main advantage of trading using opposite Dassault Systemes and Liquidia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes position performs unexpectedly, Liquidia Technologies 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 Liquidia Technologies will offset losses from the drop in Liquidia Technologies' long position.
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The idea behind Dassault Systemes SA and Liquidia Technologies 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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