Correlation Between Trigano SA and Mersen SA

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

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

Diversification Opportunities for Trigano SA and Mersen SA

0.63

Correlation Coefficient

Trigano SA  Mersen SA

Poor diversification

The 3 months correlation between Trigano and Mersen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Trigano SA and Mersen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersen SA and Trigano SA 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 Trigano SA are associated (or correlated) with Mersen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersen SA has no effect on the direction of Trigano SA i.e., Trigano SA and Mersen SA go up and down completely randomly.

Pair Corralation between Trigano SA and Mersen SA

Assuming the 90 days trading horizon Trigano SA is expected to under-perform the Mersen SA. But the stock apears to be less risky and, when comparing its historical volatility, Trigano SA is 1.51 times less risky than Mersen SA. The stock trades about -0.09 of its potential returns per unit of risk. The Mersen SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,025  in Mersen SA on December 30, 2024 and sell it today you would lose (101.00) from holding Mersen SA or give up 4.99% of portfolio value over 90 days.

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

Trigano SA  vs.  Mersen SA

Trigano SA

Risk-Adjusted Performance

Very Weak

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

Mersen SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mersen SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mersen 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 Trigano SA and Mersen SA

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

The idea behind Trigano SA and Mersen 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.