Correlation Between Gecina SA and Fonciere Lyonnaise

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

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

Diversification Opportunities for Gecina SA and Fonciere Lyonnaise

-0.84

Correlation Coefficient

Gecina SA  Fonciere Lyonnaise

Pay attention - limited upside

The 3 months correlation between Gecina and Fonciere is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gecina SA and Fonciere Lyonnaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonciere Lyonnaise and Gecina 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 Gecina SA 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 Gecina SA i.e., Gecina SA and Fonciere Lyonnaise go up and down completely randomly.

Pair Corralation between Gecina SA and Fonciere Lyonnaise

Assuming the 90 days trading horizon Gecina SA is expected to under-perform the Fonciere Lyonnaise. In addition to that, Gecina SA is 1.25 times more volatile than Fonciere Lyonnaise. It trades about -0.12 of its total potential returns per unit of risk. Fonciere Lyonnaise is currently generating about 0.36 per unit of volatility. If you would invest  7,300  in Fonciere Lyonnaise on October 9, 2024 and sell it today you would earn a total of  380.00  from holding Fonciere Lyonnaise or generate 5.21% return on investment over 90 days.

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

Gecina SA  vs.  Fonciere Lyonnaise

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 weak performance in the last few months, the Stock's fundamental 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.

Fonciere Lyonnaise

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 14 (%) 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.

Pair Trading with Gecina SA and Fonciere Lyonnaise

The main advantage of trading using opposite Gecina SA and Fonciere Lyonnaise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gecina SA 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 Gecina SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.