Correlation Between Eurocastle Investment and Kendrion

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

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

Diversification Opportunities for Eurocastle Investment and Kendrion

0.36

Correlation Coefficient

Eurocastle Investment  Kendrion

Weak diversification

The 3 months correlation between Eurocastle and Kendrion is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eurocastle Investment and Kendrion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kendrion NV and Eurocastle Investment 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 Eurocastle Investment are associated (or correlated) with Kendrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kendrion NV has no effect on the direction of Eurocastle Investment i.e., Eurocastle Investment and Kendrion go up and down completely randomly.

Pair Corralation between Eurocastle Investment and Kendrion

Assuming the 90 days trading horizon Eurocastle Investment is expected to generate 5.96 times more return on investment than Kendrion. However, Eurocastle Investment is 5.96 times more volatile than Kendrion NV. It trades about 0.09 of its potential returns per unit of risk. Kendrion NV is currently generating about -0.18 per unit of risk. If you would invest  710.00  in Eurocastle Investment on September 19, 2024 and sell it today you would earn a total of  100.00  from holding Eurocastle Investment or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	40.0%
Values	Daily Returns

Eurocastle Investment  vs.  Kendrion NV

Eurocastle Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurocastle Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eurocastle Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kendrion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kendrion NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Pair Trading with Eurocastle Investment and Kendrion

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

The idea behind Eurocastle Investment and Kendrion 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.