Correlation Between Gevelot and Mersen SA
Can any of the company-specific risk be diversified away by investing in both Gevelot and Mersen SA 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 Gevelot and Mersen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gevelot and Mersen SA, you can compare the effects of market volatilities on Gevelot and Mersen SA 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 Gevelot with a short position of Mersen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gevelot and Mersen SA.
Diversification Opportunities for Gevelot and Mersen SA
Very poor diversification
The 3 months correlation between Gevelot and Mersen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gevelot and Mersen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersen SA and Gevelot 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 Gevelot are associated (or correlated) with Mersen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersen SA has no effect on the direction of Gevelot i.e., Gevelot and Mersen SA go up and down completely randomly.
Pair Corralation between Gevelot and Mersen SA
Assuming the 90 days trading horizon Gevelot is expected to under-perform the Mersen SA. But the stock apears to be less risky and, when comparing its historical volatility, Gevelot is 2.5 times less risky than Mersen SA. The stock trades about -0.04 of its potential returns per unit of risk. The Mersen SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,090 in Mersen SA on September 12, 2024 and sell it today you would lose (10.00) from holding Mersen SA or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gevelot vs. Mersen SA
Performance |
| Timeline |
| Gevelot |
| Mersen SA |
Gevelot and Mersen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gevelot and Mersen SA
The main advantage of trading using opposite Gevelot and Mersen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gevelot position performs unexpectedly, Mersen SA 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 Mersen SA will offset losses from the drop in Mersen SA's long position.| Gevelot vs. Passat Socit Anonyme | Gevelot vs. Groupe Guillin SA | Gevelot vs. Jacques Bogart SA | Gevelot vs. VIEL Cie socit |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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