Correlation Between Burelle SA and Mercialys
Can any of the company-specific risk be diversified away by investing in both Burelle SA and Mercialys 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 Burelle SA and Mercialys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burelle SA and Mercialys SA, you can compare the effects of market volatilities on Burelle SA and Mercialys 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 Burelle SA with a short position of Mercialys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burelle SA and Mercialys.
Diversification Opportunities for Burelle SA and Mercialys
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Burelle and Mercialys is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Burelle SA and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys SA and Burelle SA 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 Burelle SA are associated (or correlated) with Mercialys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercialys SA has no effect on the direction of Burelle SA i.e., Burelle SA and Mercialys go up and down completely randomly.
Pair Corralation between Burelle SA and Mercialys
Assuming the 90 days trading horizon Burelle SA is expected to generate 1.24 times more return on investment than Mercialys. However, Burelle SA is 1.24 times more volatile than Mercialys SA. It trades about -0.13 of its potential returns per unit of risk. Mercialys SA is currently generating about -0.25 per unit of risk. If you would invest 36,500 in Burelle SA on August 30, 2024 and sell it today you would lose (3,800) from holding Burelle SA or give up 10.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burelle SA vs. Mercialys SA
Performance |
| Timeline |
| Burelle SA |
| Mercialys SA |
Burelle SA and Mercialys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burelle SA and Mercialys
The main advantage of trading using opposite Burelle SA and Mercialys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burelle SA position performs unexpectedly, Mercialys 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 Mercialys will offset losses from the drop in Mercialys' long position.| Burelle SA vs. Savencia SA | Burelle SA vs. Compagnie de lOdet | Burelle SA vs. Akwel SA | Burelle SA vs. Wendel |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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