Correlation Between Fonciere Lyonnaise and Gecina SA

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

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

Diversification Opportunities for Fonciere Lyonnaise and Gecina SA

-0.77

Correlation Coefficient

Fonciere Lyonnaise  Gecina SA

Pay attention - limited upside

The 3 months correlation between Fonciere and Gecina is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Lyonnaise and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and Fonciere Lyonnaise 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 Fonciere Lyonnaise 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 Fonciere Lyonnaise i.e., Fonciere Lyonnaise and Gecina SA go up and down completely randomly.

Pair Corralation between Fonciere Lyonnaise and Gecina SA

Assuming the 90 days trading horizon Fonciere Lyonnaise is expected to generate 1.26 times more return on investment than Gecina SA. However, Fonciere Lyonnaise is 1.26 times more volatile than Gecina SA. It trades about 0.23 of its potential returns per unit of risk. Gecina SA is currently generating about -0.14 per unit of risk. If you would invest  6,600  in Fonciere Lyonnaise on October 26, 2024 and sell it today you would earn a total of  1,560  from holding Fonciere Lyonnaise or generate 23.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Fonciere Lyonnaise  vs.  Gecina SA

Fonciere Lyonnaise

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Lyonnaise sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fonciere Lyonnaise and Gecina SA

The main advantage of trading using opposite Fonciere Lyonnaise and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fonciere Lyonnaise 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 Fonciere Lyonnaise 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.