Correlation Between Mercialys and Klepierre

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

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

Diversification Opportunities for Mercialys and Klepierre

0.23

Correlation Coefficient

Mercialys  Klepierre

Modest diversification

The 3 months correlation between Mercialys and Klepierre is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mercialys SA and Klepierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klepierre SA and Mercialys 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 Mercialys SA are associated (or correlated) with Klepierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klepierre SA has no effect on the direction of Mercialys i.e., Mercialys and Klepierre go up and down completely randomly.

Pair Corralation between Mercialys and Klepierre

Assuming the 90 days trading horizon Mercialys SA is expected to under-perform the Klepierre. In addition to that, Mercialys is 1.75 times more volatile than Klepierre SA. It trades about -0.09 of its total potential returns per unit of risk. Klepierre SA is currently generating about -0.13 per unit of volatility. If you would invest  2,936  in Klepierre SA on September 1, 2024 and sell it today you would lose (74.00) from holding Klepierre SA or give up 2.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Mercialys SA  vs.  Klepierre SA

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.

Klepierre SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Klepierre SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Klepierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mercialys and Klepierre

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

The idea behind Mercialys SA and Klepierre 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.