Correlation Between Altareit and Fonciere Lyonnaise

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

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

Diversification Opportunities for Altareit and Fonciere Lyonnaise

-0.18

Correlation Coefficient

Altareit  Fonciere Lyonnaise

Good diversification

The 3 months correlation between Altareit and Fonciere is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Altareit and Fonciere Lyonnaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonciere Lyonnaise and Altareit 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 Altareit are associated (or correlated) with Fonciere Lyonnaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonciere Lyonnaise has no effect on the direction of Altareit i.e., Altareit and Fonciere Lyonnaise go up and down completely randomly.

Pair Corralation between Altareit and Fonciere Lyonnaise

Assuming the 90 days trading horizon Altareit is expected to generate 0.25 times more return on investment than Fonciere Lyonnaise. However, Altareit is 4.06 times less risky than Fonciere Lyonnaise. It trades about 0.22 of its potential returns per unit of risk. Fonciere Lyonnaise is currently generating about 0.05 per unit of risk. If you would invest  47,000  in Altareit on December 29, 2024 and sell it today you would earn a total of  2,000  from holding Altareit or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Altareit  vs.  Fonciere Lyonnaise

Altareit

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altareit are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altareit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Fonciere Lyonnaise

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fonciere Lyonnaise is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altareit and Fonciere Lyonnaise

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

The idea behind Altareit and Fonciere Lyonnaise 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.