Correlation Between British Land and Klépierre

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

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

Diversification Opportunities for British Land and Klépierre

0.4

Correlation Coefficient

British Land  Klépierre

Very weak diversification

The 3 months correlation between British and Klépierre is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding British Land and Klpierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klpierre SA and British Land 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 British Land are associated (or correlated) with Klépierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klpierre SA has no effect on the direction of British Land i.e., British Land and Klépierre go up and down completely randomly.

Pair Corralation between British Land and Klépierre

Assuming the 90 days horizon British Land is expected to under-perform the Klépierre. But the pink sheet apears to be less risky and, when comparing its historical volatility, British Land is 1.22 times less risky than Klépierre. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Klpierre SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,950  in Klpierre SA on December 1, 2024 and sell it today you would earn a total of  259.00  from holding Klpierre SA or generate 8.78% return on investment over 90 days.

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

British Land  vs.  Klpierre SA

British Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days British Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, British Land is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Klpierre SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Klpierre SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Klépierre may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with British Land and Klépierre

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

The idea behind British Land and Klpierre 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.