Correlation Between Gecina SA and Patrimoine

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

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

Diversification Opportunities for Gecina SA and Patrimoine

0.79

Correlation Coefficient

Gecina SA  Patrimoine

Poor diversification

The 3 months correlation between Gecina and Patrimoine is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gecina SA and Patrimoine et Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patrimoine et Commerce 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 Patrimoine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patrimoine et Commerce has no effect on the direction of Gecina SA i.e., Gecina SA and Patrimoine go up and down completely randomly.

Pair Corralation between Gecina SA and Patrimoine

Assuming the 90 days trading horizon Gecina SA is expected to generate 1.39 times less return on investment than Patrimoine. In addition to that, Gecina SA is 4.11 times more volatile than Patrimoine et Commerce. It trades about 0.13 of its total potential returns per unit of risk. Patrimoine et Commerce is currently generating about 0.75 per unit of volatility. If you would invest  1,980  in Patrimoine et Commerce on October 22, 2024 and sell it today you would earn a total of  80.00  from holding Patrimoine et Commerce or generate 4.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Gecina SA  vs.  Patrimoine et Commerce

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.

Patrimoine et Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patrimoine et Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Patrimoine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gecina SA and Patrimoine

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

The idea behind Gecina SA and Patrimoine et Commerce 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 Global Correlations module to find global opportunities by holding instruments from different markets.