Correlation Between Klépierre and Vicinity Centres

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

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

Diversification Opportunities for Klépierre and Vicinity Centres

0.75

Correlation Coefficient

Klépierre  Vicinity Centres

Poor diversification

The 3 months correlation between Klépierre and Vicinity is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Klpierre SA and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres and Klépierre 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 Klpierre SA are associated (or correlated) with Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Klépierre i.e., Klépierre and Vicinity Centres go up and down completely randomly.

Pair Corralation between Klépierre and Vicinity Centres

Assuming the 90 days horizon Klpierre SA is expected to generate 0.81 times more return on investment than Vicinity Centres. However, Klpierre SA is 1.24 times less risky than Vicinity Centres. It trades about -0.08 of its potential returns per unit of risk. Vicinity Centres is currently generating about -0.09 per unit of risk. If you would invest  2,992  in Klpierre SA on October 22, 2024 and sell it today you would lose (130.00) from holding Klpierre SA or give up 4.34% of portfolio value over 90 days.

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

Klpierre SA  vs.  Vicinity Centres

Klpierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Klépierre and Vicinity Centres

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

The idea behind Klpierre SA and Vicinity Centres 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.