Correlation Between EVS Broadcast and Brederode

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

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

Diversification Opportunities for EVS Broadcast and Brederode

0.07

Correlation Coefficient

EVS Broadcast  Brederode

Significant diversification

The 3 months correlation between EVS and Brederode is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Brederode go up and down completely randomly.

Pair Corralation between EVS Broadcast and Brederode

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to under-perform the Brederode. In addition to that, EVS Broadcast is 1.17 times more volatile than Brederode SA. It trades about -0.05 of its total potential returns per unit of risk. Brederode SA is currently generating about 0.0 per unit of volatility. If you would invest  10,520  in Brederode SA on September 4, 2024 and sell it today you would lose (20.00) from holding Brederode SA or give up 0.19% of portfolio value over 90 days.

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

EVS Broadcast Equipment  vs.  Brederode SA

EVS Broadcast Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brederode SA

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with EVS Broadcast and Brederode

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

The idea behind EVS Broadcast Equipment and Brederode 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.