Correlation Between Mersen SA and Neotion SA
Can any of the company-specific risk be diversified away by investing in both Mersen SA and Neotion 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 Mersen SA and Neotion SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mersen SA and Neotion SA, you can compare the effects of market volatilities on Mersen SA and Neotion 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 Mersen SA with a short position of Neotion SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mersen SA and Neotion SA.
Diversification Opportunities for Mersen SA and Neotion SA
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mersen and Neotion is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mersen SA and Neotion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neotion SA and Mersen 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 Mersen SA are associated (or correlated) with Neotion SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neotion SA has no effect on the direction of Mersen SA i.e., Mersen SA and Neotion SA go up and down completely randomly.
Pair Corralation between Mersen SA and Neotion SA
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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mersen SA vs. Neotion SA
Performance |
| Timeline |
| Mersen SA |
| Neotion SA |
Mersen SA and Neotion SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mersen SA and Neotion SA
The main advantage of trading using opposite Mersen SA and Neotion SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mersen SA position performs unexpectedly, Neotion 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 Neotion SA will offset losses from the drop in Neotion SA's long position.The idea behind Mersen SA and Neotion SA 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.| Neotion SA vs. Lacroix Group SA | Neotion SA vs. NSE SA | Neotion SA vs. Groupe Tera SA | Neotion SA vs. Made 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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