Correlation Between Frey SA and Fonciere Inea

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

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

Diversification Opportunities for Frey SA and Fonciere Inea

-0.07

Correlation Coefficient

Frey SA  Fonciere Inea

Good diversification

The 3 months correlation between Frey and Fonciere is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Frey SA and Fonciere Inea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonciere Inea and Frey 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 Frey SA are associated (or correlated) with Fonciere Inea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonciere Inea has no effect on the direction of Frey SA i.e., Frey SA and Fonciere Inea go up and down completely randomly.

Pair Corralation between Frey SA and Fonciere Inea

Assuming the 90 days trading horizon Frey SA is expected to generate 0.89 times more return on investment than Fonciere Inea. However, Frey SA is 1.13 times less risky than Fonciere Inea. It trades about 0.0 of its potential returns per unit of risk. Fonciere Inea is currently generating about -0.03 per unit of risk. If you would invest  2,953  in Frey SA on October 9, 2024 and sell it today you would lose (93.00) from holding Frey SA or give up 3.15% of portfolio value over 90 days.

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

Frey SA  vs.  Fonciere Inea

Frey SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Frey SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Frey SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fonciere Inea

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Inea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Inea may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Frey SA and Fonciere Inea

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

The idea behind Frey SA and Fonciere Inea 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.