Correlation Between Eurocommercial Properties and Inpost SA

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

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

Diversification Opportunities for Eurocommercial Properties and Inpost SA

0.06

Correlation Coefficient

Eurocommercial Properties  Inpost SA

Significant diversification

The 3 months correlation between Eurocommercial and Inpost is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eurocommercial Properties NV and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA and Eurocommercial Properties 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 Eurocommercial Properties NV are associated (or correlated) with Inpost SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpost SA has no effect on the direction of Eurocommercial Properties i.e., Eurocommercial Properties and Inpost SA go up and down completely randomly.

Pair Corralation between Eurocommercial Properties and Inpost SA

Assuming the 90 days trading horizon Eurocommercial Properties NV is expected to under-perform the Inpost SA. But the stock apears to be less risky and, when comparing its historical volatility, Eurocommercial Properties NV is 1.64 times less risky than Inpost SA. The stock trades about -0.19 of its potential returns per unit of risk. The Inpost SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,692  in Inpost SA on September 13, 2024 and sell it today you would lose (20.00) from holding Inpost SA or give up 1.18% of portfolio value over 90 days.

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

Eurocommercial Properties NV  vs.  Inpost SA

Eurocommercial Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurocommercial Properties NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Inpost SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpost SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Inpost SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eurocommercial Properties and Inpost SA

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

The idea behind Eurocommercial Properties NV and Inpost 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.