Correlation Between Mercialys and Acanthe Dveloppement

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

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

Diversification Opportunities for Mercialys and Acanthe Dveloppement

0.6

Correlation Coefficient

Mercialys  Acanthe Dveloppement

Poor diversification

The 3 months correlation between Mercialys and Acanthe is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mercialys SA and Acanthe Dveloppement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acanthe Dveloppement and Mercialys 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 Mercialys SA are associated (or correlated) with Acanthe Dveloppement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acanthe Dveloppement has no effect on the direction of Mercialys i.e., Mercialys and Acanthe Dveloppement go up and down completely randomly.

Pair Corralation between Mercialys and Acanthe Dveloppement

Assuming the 90 days trading horizon Mercialys SA is expected to under-perform the Acanthe Dveloppement. But the stock apears to be less risky and, when comparing its historical volatility, Mercialys SA is 1.41 times less risky than Acanthe Dveloppement. The stock trades about -0.2 of its potential returns per unit of risk. The Acanthe Dveloppement is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Acanthe Dveloppement on September 16, 2024 and sell it today you would lose (3.00) from holding Acanthe Dveloppement or give up 8.82% of portfolio value over 90 days.

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

Mercialys SA  vs.  Acanthe Dveloppement

Mercialys SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercialys 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Acanthe Dveloppement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acanthe Dveloppement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Mercialys and Acanthe Dveloppement

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

The idea behind Mercialys SA and Acanthe Dveloppement 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.