Correlation Between Land Securities and Klépierre

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

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

Diversification Opportunities for Land Securities and Klépierre

0.58

Correlation Coefficient

Land Securities  Klépierre

Very weak diversification

The 3 months correlation between Land and Klépierre is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Land Securities Group and Klpierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klpierre SA and Land Securities 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 Land Securities Group 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 Land Securities i.e., Land Securities and Klépierre go up and down completely randomly.

Pair Corralation between Land Securities and Klépierre

Assuming the 90 days horizon Land Securities is expected to generate 9.33 times less return on investment than Klépierre. But when comparing it to its historical volatility, Land Securities Group is 1.21 times less risky than Klépierre. It trades about 0.02 of its potential returns per unit of risk. Klpierre SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,811  in Klpierre SA on December 29, 2024 and sell it today you would earn a total of  527.00  from holding Klpierre SA or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Land Securities Group  vs.  Klpierre SA

Land Securities Group

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Land Securities Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Land Securities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Klpierre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Klpierre SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Klépierre reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Land Securities and Klépierre

The main advantage of trading using opposite Land Securities and Klépierre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Land Securities 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 Land Securities Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.