Correlation Between Merlin Properties and Acerinox

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

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

Diversification Opportunities for Merlin Properties and Acerinox

-0.42

Correlation Coefficient

Merlin Properties  Acerinox

Very good diversification

The 3 months correlation between Merlin and Acerinox is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Merlin Properties 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 Merlin Properties SOCIMI are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of Merlin Properties i.e., Merlin Properties and Acerinox go up and down completely randomly.

Pair Corralation between Merlin Properties and Acerinox

Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to under-perform the Acerinox. In addition to that, Merlin Properties is 1.09 times more volatile than Acerinox. It trades about 0.0 of its total potential returns per unit of risk. Acerinox is currently generating about 0.19 per unit of volatility. If you would invest  913.00  in Acerinox on December 30, 2024 and sell it today you would earn a total of  191.00  from holding Acerinox or generate 20.92% return on investment over 90 days.

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

Merlin Properties SOCIMI  vs.  Acerinox

Merlin Properties SOCIMI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merlin Properties SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Merlin Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Acerinox

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Acerinox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merlin Properties and Acerinox

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

The idea behind Merlin Properties SOCIMI and Acerinox 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.