Correlation Between Covivio SA and Mercialys

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

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

Diversification Opportunities for Covivio SA and Mercialys

0.78

Correlation Coefficient

Covivio SA  Mercialys

Poor diversification

The 3 months correlation between Covivio and Mercialys is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys SA and Covivio 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 Covivio SA 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 Covivio SA i.e., Covivio SA and Mercialys go up and down completely randomly.

Pair Corralation between Covivio SA and Mercialys

Assuming the 90 days trading horizon Covivio SA is expected to generate 0.95 times more return on investment than Mercialys. However, Covivio SA is 1.05 times less risky than Mercialys. It trades about 0.01 of its potential returns per unit of risk. Mercialys SA is currently generating about -0.12 per unit of risk. If you would invest  5,190  in Covivio SA on September 1, 2024 and sell it today you would earn a total of  10.00  from holding Covivio SA or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Covivio SA  vs.  Mercialys SA

Covivio SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 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 Covivio SA and Mercialys

The main advantage of trading using opposite Covivio SA and Mercialys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio SA 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 Covivio SA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.