Correlation Between Carmila SA and Mercialys
Can any of the company-specific risk be diversified away by investing in both Carmila 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 Carmila SA and Mercialys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carmila SA and Mercialys SA, you can compare the effects of market volatilities on Carmila 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 Carmila SA with a short position of Mercialys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carmila SA and Mercialys.
Diversification Opportunities for Carmila SA and Mercialys
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carmila and Mercialys is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Carmila SA and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys SA and Carmila 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 Carmila 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 Carmila SA i.e., Carmila SA and Mercialys go up and down completely randomly.
Pair Corralation between Carmila SA and Mercialys
Assuming the 90 days trading horizon Carmila SA is expected to under-perform the Mercialys. But the stock apears to be less risky and, when comparing its historical volatility, Carmila SA is 1.56 times less risky than Mercialys. The stock trades about -0.36 of its potential returns per unit of risk. The Mercialys SA is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 1,116 in Mercialys SA on August 28, 2024 and sell it today you would lose (67.00) from holding Mercialys SA or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carmila SA vs. Mercialys SA
Performance |
| Timeline |
| Carmila SA |
| Mercialys SA |
Carmila SA and Mercialys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carmila SA and Mercialys
The main advantage of trading using opposite Carmila SA and Mercialys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carmila 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.| Carmila SA vs. Mercialys SA | Carmila SA vs. Icade SA | Carmila SA vs. Klepierre SA | Carmila SA vs. Altarea SCA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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