Correlation Between Alexandria Real and Gecina SA

Can any of the company-specific risk be diversified away by investing in both Alexandria Real and Gecina 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 Alexandria Real and Gecina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alexandria Real Estate and Gecina SA, you can compare the effects of market volatilities on Alexandria Real and Gecina 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 Alexandria Real with a short position of Gecina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and Gecina SA.

Diversification Opportunities for Alexandria Real and Gecina SA

0.68

Correlation Coefficient

Alexandria Real  Gecina SA

Poor diversification

The 3 months correlation between Alexandria and Gecina is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and Alexandria Real 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 Alexandria Real Estate are associated (or correlated) with Gecina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gecina SA has no effect on the direction of Alexandria Real i.e., Alexandria Real and Gecina SA go up and down completely randomly.

Pair Corralation between Alexandria Real and Gecina SA

Considering the 90-day investment horizon Alexandria Real Estate is expected to under-perform the Gecina SA. But the stock apears to be less risky and, when comparing its historical volatility, Alexandria Real Estate is 2.44 times less risky than Gecina SA. The stock trades about -0.06 of its potential returns per unit of risk. The Gecina SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,658  in Gecina SA on September 2, 2024 and sell it today you would lose (384.00) from holding Gecina SA or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alexandria Real Estate  vs.  Gecina SA

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Alexandria Real is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Gecina SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gecina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Gecina SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alexandria Real and Gecina SA

The main advantage of trading using opposite Alexandria Real and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexandria Real position performs unexpectedly, Gecina 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 Gecina SA will offset losses from the drop in Gecina SA's long position.

The idea behind Alexandria Real Estate and Gecina 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.