Correlation Between Fonciere Inea and Klepierre

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

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

Diversification Opportunities for Fonciere Inea and Klepierre

-0.11

Correlation Coefficient

Fonciere Inea  Klepierre

Good diversification

The 3 months correlation between Fonciere and Klepierre is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fonciere Inea and Klepierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klepierre SA and Fonciere Inea 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 Fonciere Inea are associated (or correlated) with Klepierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klepierre SA has no effect on the direction of Fonciere Inea i.e., Fonciere Inea and Klepierre go up and down completely randomly.

Pair Corralation between Fonciere Inea and Klepierre

Assuming the 90 days trading horizon Fonciere Inea is expected to under-perform the Klepierre. In addition to that, Fonciere Inea is 1.31 times more volatile than Klepierre SA. It trades about -0.35 of its total potential returns per unit of risk. Klepierre SA is currently generating about -0.23 per unit of volatility. If you would invest  2,686  in Klepierre SA on April 2, 2024 and sell it today you would lose (166.00) from holding Klepierre SA or give up 6.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Fonciere Inea  vs.  Klepierre SA

Fonciere Inea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonciere Inea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Klepierre SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Klepierre SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Klepierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fonciere Inea and Klepierre

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

The idea behind Fonciere Inea and Klepierre 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.