Correlation Between Klepierre and Wereldhave

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

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

Diversification Opportunities for Klepierre and Wereldhave

0.9

Correlation Coefficient

Klepierre  Wereldhave

Almost no diversification

The 3 months correlation between Klepierre and Wereldhave is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Klepierre SA and Wereldhave NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wereldhave NV 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 Wereldhave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wereldhave NV has no effect on the direction of Klepierre i.e., Klepierre and Wereldhave go up and down completely randomly.

Pair Corralation between Klepierre and Wereldhave

Assuming the 90 days horizon Klepierre is expected to generate 1.11 times less return on investment than Wereldhave. But when comparing it to its historical volatility, Klepierre SA is 1.41 times less risky than Wereldhave. It trades about 0.23 of its potential returns per unit of risk. Wereldhave NV is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,372  in Wereldhave NV on December 23, 2024 and sell it today you would earn a total of  206.00  from holding Wereldhave NV or generate 15.01% return on investment over 90 days.

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

Klepierre SA  vs.  Wereldhave NV

Klepierre SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Klepierre SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Klepierre sustained solid returns over the last few months and may actually be approaching a breakup point.

Wereldhave NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wereldhave NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Wereldhave unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Klepierre and Wereldhave

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

The idea behind Klepierre SA and Wereldhave 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.