Correlation Between Merlin Properties and Elaia Investment

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

Diversification Opportunities for Merlin Properties and Elaia Investment

0.45

Correlation Coefficient

Merlin Properties  Elaia Investment

Very weak diversification

The 3 months correlation between Merlin and Elaia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Merlin Properties SOCIMI and Elaia Investment Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elaia Investment Spain 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 Elaia Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elaia Investment Spain has no effect on the direction of Merlin Properties i.e., Merlin Properties and Elaia Investment go up and down completely randomly.

Pair Corralation between Merlin Properties and Elaia Investment

Assuming the 90 days trading horizon Merlin Properties SOCIMI is expected to generate 1.09 times more return on investment than Elaia Investment. However, Merlin Properties is 1.09 times more volatile than Elaia Investment Spain. It trades about 0.0 of its potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.37 per unit of risk. If you would invest  1,010  in Merlin Properties SOCIMI on December 29, 2024 and sell it today you would lose (11.00) from holding Merlin Properties SOCIMI or give up 1.09% of portfolio value over 90 days.

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

Merlin Properties SOCIMI  vs.  Elaia Investment Spain

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.

Elaia Investment Spain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elaia Investment Spain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Merlin Properties and Elaia Investment

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

The idea behind Merlin Properties SOCIMI and Elaia Investment Spain 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.