Correlation Between Deoleo SA and Merlin Properties

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

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

Diversification Opportunities for Deoleo SA and Merlin Properties

0.0

Correlation Coefficient

Deoleo SA  Merlin Properties

Pay attention - limited upside

The 3 months correlation between Deoleo and Merlin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Deoleo SA and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI and Deoleo SA 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 Deoleo SA are associated (or correlated) with Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of Deoleo SA i.e., Deoleo SA and Merlin Properties go up and down completely randomly.

Pair Corralation between Deoleo SA and Merlin Properties

Assuming the 90 days trading horizon Deoleo SA is expected to under-perform the Merlin Properties. In addition to that, Deoleo SA is 1.56 times more volatile than Merlin Properties SOCIMI. It trades about -0.04 of its total potential returns per unit of risk. Merlin Properties SOCIMI is currently generating about 0.03 per unit of volatility. If you would invest  1,034  in Merlin Properties SOCIMI on November 27, 2024 and sell it today you would earn a total of  24.00  from holding Merlin Properties SOCIMI or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Deoleo SA  vs.  Merlin Properties SOCIMI

Deoleo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deoleo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Merlin Properties SOCIMI

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merlin Properties SOCIMI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Deoleo SA and Merlin Properties

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

The idea behind Deoleo SA and Merlin Properties SOCIMI 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.