Correlation Between Mercialys and Altarea SCA
Can any of the company-specific risk be diversified away by investing in both Mercialys and Altarea SCA 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 Mercialys and Altarea SCA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercialys SA and Altarea SCA, you can compare the effects of market volatilities on Mercialys and Altarea SCA 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 Mercialys with a short position of Altarea SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercialys and Altarea SCA.
Diversification Opportunities for Mercialys and Altarea SCA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercialys and Altarea is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mercialys SA and Altarea SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altarea SCA and Mercialys 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 Mercialys SA are associated (or correlated) with Altarea SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altarea SCA has no effect on the direction of Mercialys i.e., Mercialys and Altarea SCA go up and down completely randomly.
Pair Corralation between Mercialys and Altarea SCA
Assuming the 90 days trading horizon Mercialys SA is expected to under-perform the Altarea SCA. But the stock apears to be less risky and, when comparing its historical volatility, Mercialys SA is 1.17 times less risky than Altarea SCA. The stock trades about -0.18 of its potential returns per unit of risk. The Altarea SCA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 9,850 in Altarea SCA on August 28, 2024 and sell it today you would lose (90.00) from holding Altarea SCA or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercialys SA vs. Altarea SCA
Performance |
| Timeline |
| Mercialys SA |
| Altarea SCA |
Mercialys and Altarea SCA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercialys and Altarea SCA
The main advantage of trading using opposite Mercialys and Altarea SCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercialys position performs unexpectedly, Altarea SCA 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 Altarea SCA will offset losses from the drop in Altarea SCA's long position.The idea behind Mercialys SA and Altarea SCA 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.| Altarea SCA vs. Icade SA | Altarea SCA vs. Covivio SA | Altarea SCA vs. Mercialys SA | Altarea SCA vs. Gecina SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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