Correlation Between Klepierre and Eurocommercial Properties

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

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

Diversification Opportunities for Klepierre and Eurocommercial Properties

0.87

Correlation Coefficient

Klepierre  Eurocommercial Properties

Very poor diversification

The 3 months correlation between Klepierre and Eurocommercial is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Klepierre SA and Eurocommercial Properties NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurocommercial Properties and Klepierre 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 Klepierre SA are associated (or correlated) with Eurocommercial Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurocommercial Properties has no effect on the direction of Klepierre i.e., Klepierre and Eurocommercial Properties go up and down completely randomly.

Pair Corralation between Klepierre and Eurocommercial Properties

Assuming the 90 days horizon Klepierre SA is expected to generate 0.91 times more return on investment than Eurocommercial Properties. However, Klepierre SA is 1.1 times less risky than Eurocommercial Properties. It trades about 0.16 of its potential returns per unit of risk. Eurocommercial Properties NV is currently generating about 0.12 per unit of risk. If you would invest  2,826  in Klepierre SA on December 4, 2024 and sell it today you would earn a total of  256.00  from holding Klepierre SA or generate 9.06% return on investment over 90 days.

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

Klepierre SA  vs.  Eurocommercial Properties NV

Klepierre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Klepierre SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Klepierre may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eurocommercial Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocommercial Properties NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Eurocommercial Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Klepierre and Eurocommercial Properties

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

The idea behind Klepierre SA and Eurocommercial Properties NV 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 Transaction History module to view history of all your transactions and understand their impact on performance.