Correlation Between Merlin Properties and Viscofan

Can any of the company-specific risk be diversified away by investing in both Merlin Properties and Viscofan 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 Viscofan 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 Viscofan, you can compare the effects of market volatilities on Merlin Properties and Viscofan 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 Viscofan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merlin Properties and Viscofan.

Diversification Opportunities for Merlin Properties and Viscofan

0.24

Correlation Coefficient

Merlin Properties  Viscofan

Modest diversification

The 3 months correlation between Merlin and Viscofan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Viscofan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viscofan 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 Viscofan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viscofan has no effect on the direction of Merlin Properties i.e., Merlin Properties and Viscofan go up and down completely randomly.

Pair Corralation between Merlin Properties and Viscofan

Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to generate 1.24 times more return on investment than Viscofan. However, Merlin Properties is 1.24 times more volatile than Viscofan. It trades about 0.04 of its potential returns per unit of risk. Viscofan is currently generating about 0.02 per unit of risk. If you would invest  833.00  in Merlin Properties SOCIMI on September 13, 2024 and sell it today you would earn a total of  195.00  from holding Merlin Properties SOCIMI or generate 23.41% return on investment over 90 days.

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

Merlin Properties SOCIMI  vs.  Viscofan

Merlin Properties SOCIMI

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Viscofan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Merlin Properties and Viscofan

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

The idea behind Merlin Properties SOCIMI and Viscofan 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.