Correlation Between Sovereign Metals and Gecina SA

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

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

Diversification Opportunities for Sovereign Metals and Gecina SA

-0.84

Correlation Coefficient

Sovereign Metals  Gecina SA

Pay attention - limited upside

The 3 months correlation between Sovereign and Gecina is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sovereign Metals Limited and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and Sovereign Metals 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 Sovereign Metals Limited 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 Sovereign Metals i.e., Sovereign Metals and Gecina SA go up and down completely randomly.

Pair Corralation between Sovereign Metals and Gecina SA

Assuming the 90 days horizon Sovereign Metals Limited is expected to generate 2.97 times more return on investment than Gecina SA. However, Sovereign Metals is 2.97 times more volatile than Gecina SA. It trades about 0.05 of its potential returns per unit of risk. Gecina SA is currently generating about -0.22 per unit of risk. If you would invest  45.00  in Sovereign Metals Limited on September 19, 2024 and sell it today you would earn a total of  1.00  from holding Sovereign Metals Limited or generate 2.22% return on investment over 90 days.

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

Sovereign Metals Limited  vs.  Gecina SA

Sovereign Metals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sovereign Metals reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sovereign Metals and Gecina SA

The main advantage of trading using opposite Sovereign Metals and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sovereign Metals 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 Sovereign Metals Limited 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.