Correlation Between Mersen SA and Netgem SA

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

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

Diversification Opportunities for Mersen SA and Netgem SA

0.0

Correlation Coefficient

Mersen SA  Netgem SA

Pay attention - limited upside

The 3 months correlation between Mersen and Netgem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mersen SA and Netgem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netgem SA and Mersen 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 Mersen SA are associated (or correlated) with Netgem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netgem SA has no effect on the direction of Mersen SA i.e., Mersen SA and Netgem SA go up and down completely randomly.

Pair Corralation between Mersen SA and Netgem SA

If you would invest  1,762  in Mersen SA on April 24, 2025 and sell it today you would earn a total of  388.00  from holding Mersen SA or generate 22.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Mersen SA  vs.  Netgem SA

Mersen SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mersen SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mersen SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Netgem SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netgem SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Netgem SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mersen SA and Netgem SA

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

The idea behind Mersen SA and Netgem 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.