Correlation Between NV Bekaert and Thyssenkrupp

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

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

Diversification Opportunities for NV Bekaert and Thyssenkrupp

-0.39

Correlation Coefficient

NV Bekaert  Thyssenkrupp

Very good diversification

The 3 months correlation between BEKAY and Thyssenkrupp is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Thyssenkrupp AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ADR and NV Bekaert 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 NV Bekaert SA are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ADR has no effect on the direction of NV Bekaert i.e., NV Bekaert and Thyssenkrupp go up and down completely randomly.

Pair Corralation between NV Bekaert and Thyssenkrupp

Assuming the 90 days horizon NV Bekaert SA is expected to under-perform the Thyssenkrupp. But the pink sheet apears to be less risky and, when comparing its historical volatility, NV Bekaert SA is 1.12 times less risky than Thyssenkrupp. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Thyssenkrupp AG ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  407.00  in Thyssenkrupp AG ADR on September 25, 2024 and sell it today you would earn a total of  8.00  from holding Thyssenkrupp AG ADR or generate 1.97% return on investment over 90 days.

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

NV Bekaert SA  vs.  Thyssenkrupp AG ADR

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thyssenkrupp AG ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thyssenkrupp AG ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, Thyssenkrupp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NV Bekaert and Thyssenkrupp

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

The idea behind NV Bekaert SA and Thyssenkrupp AG ADR 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..