Correlation Between Gecina SA and Lhyfe SA

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

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

Diversification Opportunities for Gecina SA and Lhyfe SA

0.46

Correlation Coefficient

Gecina SA  Lhyfe SA

Very weak diversification

The 3 months correlation between Gecina and Lhyfe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gecina SA and Lhyfe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lhyfe SA 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 Lhyfe SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lhyfe SA has no effect on the direction of Gecina SA i.e., Gecina SA and Lhyfe SA go up and down completely randomly.

Pair Corralation between Gecina SA and Lhyfe SA

Assuming the 90 days trading horizon Gecina SA is expected to generate 0.49 times more return on investment than Lhyfe SA. However, Gecina SA is 2.04 times less risky than Lhyfe SA. It trades about -0.07 of its potential returns per unit of risk. Lhyfe SA is currently generating about -0.16 per unit of risk. If you would invest  10,050  in Gecina SA on September 3, 2024 and sell it today you would lose (515.00) from holding Gecina SA or give up 5.12% of portfolio value over 90 days.

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

Gecina SA  vs.  Lhyfe SA

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 somewhat strong fundamental indicators, Gecina SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lhyfe SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lhyfe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Gecina SA and Lhyfe SA

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

The idea behind Gecina SA and Lhyfe 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.