Correlation Between Mercialys and Burelle SA

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

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

Diversification Opportunities for Mercialys and Burelle SA

0.79

Correlation Coefficient

Mercialys  Burelle SA

Poor diversification

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

Pair Corralation between Mercialys and Burelle SA

Assuming the 90 days trading horizon Mercialys is expected to generate 1.42 times less return on investment than Burelle SA. But when comparing it to its historical volatility, Mercialys SA is 2.09 times less risky than Burelle SA. It trades about 0.05 of its potential returns per unit of risk. Burelle SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  32,100  in Burelle SA on October 11, 2024 and sell it today you would earn a total of  300.00  from holding Burelle SA or generate 0.93% return on investment over 90 days.

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

Mercialys SA  vs.  Burelle SA

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Burelle SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mercialys and Burelle SA

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

The idea behind Mercialys SA and Burelle 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.