Correlation Between Fonciere Inea and Mercialys

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

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

Diversification Opportunities for Fonciere Inea and Mercialys

0.6

Correlation Coefficient

Fonciere Inea  Mercialys

Poor diversification

The 3 months correlation between Fonciere and Mercialys is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Inea and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys 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 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 Fonciere Inea i.e., Fonciere Inea and Mercialys go up and down completely randomly.

Pair Corralation between Fonciere Inea and Mercialys

Assuming the 90 days trading horizon Fonciere Inea is expected to generate 1.32 times more return on investment than Mercialys. However, Fonciere Inea is 1.32 times more volatile than Mercialys SA. It trades about 0.18 of its potential returns per unit of risk. Mercialys SA is currently generating about 0.18 per unit of risk. If you would invest  3,130  in Fonciere Inea on December 25, 2024 and sell it today you would earn a total of  470.00  from holding Fonciere Inea or generate 15.02% return on investment over 90 days.

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

Fonciere Inea  vs.  Mercialys SA

Fonciere Inea

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Inea are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Inea sustained solid returns over the last few months and may actually be approaching a breakup point.

Mercialys SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mercialys SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mercialys may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fonciere Inea and Mercialys

The main advantage of trading using opposite Fonciere Inea and Mercialys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fonciere Inea 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 Fonciere Inea 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.