Correlation Between Frey SA and Mercialys

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

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

Diversification Opportunities for Frey SA and Mercialys

-0.28

Correlation Coefficient

Frey SA  Mercialys

Very good diversification

The 3 months correlation between Frey and Mercialys is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Frey SA and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys SA 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 Mercialys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercialys SA has no effect on the direction of Frey SA i.e., Frey SA and Mercialys go up and down completely randomly.

Pair Corralation between Frey SA and Mercialys

Assuming the 90 days trading horizon Frey SA is expected to under-perform the Mercialys. But the stock apears to be less risky and, when comparing its historical volatility, Frey SA is 1.26 times less risky than Mercialys. The stock trades about -0.06 of its potential returns per unit of risk. The Mercialys SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Mercialys SA on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Mercialys SA or generate 0.5% return on investment over 90 days.

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

Frey SA  vs.  Mercialys SA

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.

Mercialys SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercialys SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Frey SA and Mercialys

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

The idea behind Frey SA and Mercialys 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.