Correlation Between Fonciere Inea and Gecina SA

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

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

Diversification Opportunities for Fonciere Inea and Gecina SA

-0.58

Correlation Coefficient

Fonciere Inea  Gecina SA

Excellent diversification

The 3 months correlation between Fonciere and Gecina is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Inea and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and Fonciere Inea 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 Fonciere Inea are associated (or correlated) with Gecina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gecina SA has no effect on the direction of Fonciere Inea i.e., Fonciere Inea and Gecina SA go up and down completely randomly.

Pair Corralation between Fonciere Inea and Gecina SA

Assuming the 90 days trading horizon Fonciere Inea is expected to generate 0.83 times more return on investment than Gecina SA. However, Fonciere Inea is 1.21 times less risky than Gecina SA. It trades about 0.07 of its potential returns per unit of risk. Gecina SA is currently generating about -0.22 per unit of risk. If you would invest  3,050  in Fonciere Inea on September 4, 2024 and sell it today you would earn a total of  50.00  from holding Fonciere Inea or generate 1.64% return on investment over 90 days.

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

Fonciere Inea  vs.  Gecina SA

Fonciere Inea

Risk-Adjusted Performance

2 of 100

Weak

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

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.

Pair Trading with Fonciere Inea and Gecina SA

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

The idea behind Fonciere Inea and Gecina 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.