Correlation Between Flow Traders and Corbion NV

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

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

Diversification Opportunities for Flow Traders and Corbion NV

-0.33

Correlation Coefficient

Flow Traders  Corbion NV

Very good diversification

The 3 months correlation between Flow and Corbion is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV and Corbion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corbion NV and Flow Traders 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 Flow Traders BV are associated (or correlated) with Corbion NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corbion NV has no effect on the direction of Flow Traders i.e., Flow Traders and Corbion NV go up and down completely randomly.

Pair Corralation between Flow Traders and Corbion NV

Assuming the 90 days trading horizon Flow Traders BV is expected to generate 0.9 times more return on investment than Corbion NV. However, Flow Traders BV is 1.11 times less risky than Corbion NV. It trades about 0.21 of its potential returns per unit of risk. Corbion NV is currently generating about -0.08 per unit of risk. If you would invest  1,827  in Flow Traders BV on September 19, 2024 and sell it today you would earn a total of  405.00  from holding Flow Traders BV or generate 22.17% return on investment over 90 days.

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

Flow Traders BV  vs.  Corbion NV

Flow Traders BV

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders BV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Corbion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corbion NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Flow Traders and Corbion NV

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

The idea behind Flow Traders BV and Corbion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.