Correlation Between Allegroeu and Mercator Medical

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

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

Diversification Opportunities for Allegroeu and Mercator Medical

0.55

Correlation Coefficient

Allegroeu  Mercator Medical

Very weak diversification

The 3 months correlation between Allegroeu and Mercator is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical and Allegroeu 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 Allegroeu SA are associated (or correlated) with Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of Allegroeu i.e., Allegroeu and Mercator Medical go up and down completely randomly.

Pair Corralation between Allegroeu and Mercator Medical

Assuming the 90 days trading horizon Allegroeu SA is expected to generate 1.19 times more return on investment than Mercator Medical. However, Allegroeu is 1.19 times more volatile than Mercator Medical SA. It trades about 0.08 of its potential returns per unit of risk. Mercator Medical SA is currently generating about 0.08 per unit of risk. If you would invest  3,382  in Allegroeu SA on April 24, 2025 and sell it today you would earn a total of  267.00  from holding Allegroeu SA or generate 7.89% return on investment over 90 days.

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

Allegroeu SA  vs.  Mercator Medical SA

Allegroeu SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allegroeu SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Allegroeu may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Mercator Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mercator Medical SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mercator Medical may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Allegroeu and Mercator Medical

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

The idea behind Allegroeu SA and Mercator Medical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.