Correlation Between Campine and Brouwerij Handelsmaatschap

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

By analyzing existing cross correlation between Campine and Brouwerij Handelsmaatschappij NV, you can compare the effects of market volatilities on Campine and Brouwerij Handelsmaatschap 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 Campine with a short position of Brouwerij Handelsmaatschap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campine and Brouwerij Handelsmaatschap.

Diversification Opportunities for Campine and Brouwerij Handelsmaatschap

-0.44

Correlation Coefficient

Campine  Brouwerij Handelsmaatschap

Very good diversification

The 3 months correlation between Campine and Brouwerij is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Campine and Brouwerij Handelsmaatschappij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brouwerij Handelsmaatschap and Campine 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 Campine are associated (or correlated) with Brouwerij Handelsmaatschap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brouwerij Handelsmaatschap has no effect on the direction of Campine i.e., Campine and Brouwerij Handelsmaatschap go up and down completely randomly.

Pair Corralation between Campine and Brouwerij Handelsmaatschap

Assuming the 90 days trading horizon Campine is expected to generate 0.85 times more return on investment than Brouwerij Handelsmaatschap. However, Campine is 1.18 times less risky than Brouwerij Handelsmaatschap. It trades about 0.3 of its potential returns per unit of risk. Brouwerij Handelsmaatschappij NV is currently generating about -0.02 per unit of risk. If you would invest  7,800  in Campine on September 23, 2024 and sell it today you would earn a total of  4,100  from holding Campine or generate 52.56% return on investment over 90 days.

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

Campine  vs.  Brouwerij Handelsmaatschappij

Campine

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Campine are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Campine reported solid returns over the last few months and may actually be approaching a breakup point.

Brouwerij Handelsmaatschap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brouwerij Handelsmaatschappij NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brouwerij Handelsmaatschap is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Campine and Brouwerij Handelsmaatschap

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

The idea behind Campine and Brouwerij Handelsmaatschappij NV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.