Correlation Between Link Real and Klpierre

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

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

Diversification Opportunities for Link Real and Klpierre

-0.77

Correlation Coefficient

Link Real  Klpierre

Pay attention - limited upside

The 3 months correlation between Link and Klpierre is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Klpierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klpierre SA and Link Real 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 Link Real Estate are associated (or correlated) with Klpierre. 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 Link Real i.e., Link Real and Klpierre go up and down completely randomly.

Pair Corralation between Link Real and Klpierre

Assuming the 90 days horizon Link Real Estate is expected to under-perform the Klpierre. But the stock apears to be less risky and, when comparing its historical volatility, Link Real Estate is 1.2 times less risky than Klpierre. The stock trades about -0.2 of its potential returns per unit of risk. The Klpierre SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,804  in Klpierre SA on October 1, 2024 and sell it today you would lose (20.00) from holding Klpierre SA or give up 0.71% of portfolio value over 90 days.

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

Link Real Estate  vs.  Klpierre SA

Link Real Estate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

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, Klpierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Link Real and Klpierre

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

The idea behind Link Real Estate 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.