Correlation Between United States and Klépierre

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

By analyzing existing cross correlation between United States Steel and Klpierre SA, you can compare the effects of market volatilities on United States and Klépierre 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 United States with a short position of Klépierre. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Klépierre.

Diversification Opportunities for United States and Klépierre

0.26

Correlation Coefficient

United States  Klépierre

Modest diversification

The 3 months correlation between United and Klépierre is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Klpierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klpierre SA and United States 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 United States Steel are associated (or correlated) with Klépierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klpierre SA has no effect on the direction of United States i.e., United States and Klépierre go up and down completely randomly.

Pair Corralation between United States and Klépierre

Assuming the 90 days trading horizon United States Steel is expected to under-perform the Klépierre. In addition to that, United States is 4.13 times more volatile than Klpierre SA. It trades about -0.1 of its total potential returns per unit of risk. Klpierre SA is currently generating about -0.07 per unit of volatility. If you would invest  2,874  in Klpierre SA on October 6, 2024 and sell it today you would lose (82.00) from holding Klpierre SA or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

United States Steel  vs.  Klpierre SA

United States Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Klpierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klpierre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Klépierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United States and Klépierre

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

The idea behind United States Steel and Klpierre SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.