Correlation Between Selectirente and Fonciere Lyonnaise

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

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

Diversification Opportunities for Selectirente and Fonciere Lyonnaise

0.63

Correlation Coefficient

Selectirente  Fonciere Lyonnaise

Poor diversification

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

Pair Corralation between Selectirente and Fonciere Lyonnaise

Assuming the 90 days trading horizon Selectirente is expected to generate 183.56 times less return on investment than Fonciere Lyonnaise. But when comparing it to its historical volatility, Selectirente is 3.4 times less risky than Fonciere Lyonnaise. It trades about 0.0 of its potential returns per unit of risk. Fonciere Lyonnaise is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,620  in Fonciere Lyonnaise on September 17, 2024 and sell it today you would earn a total of  700.00  from holding Fonciere Lyonnaise or generate 10.57% return on investment over 90 days.

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

Selectirente  vs.  Fonciere Lyonnaise

Selectirente

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selectirente has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Selectirente is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Fonciere Lyonnaise

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fonciere Lyonnaise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fonciere Lyonnaise may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Selectirente and Fonciere Lyonnaise

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

The idea behind Selectirente and Fonciere Lyonnaise 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.