Correlation Between Jensen and Melexis NV

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

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

Diversification Opportunities for Jensen and Melexis NV

-0.14

Correlation Coefficient

Jensen  Melexis NV

Good diversification

The 3 months correlation between Jensen and Melexis is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and Jensen 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 Jensen Group are associated (or correlated) with Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Jensen i.e., Jensen and Melexis NV go up and down completely randomly.

Pair Corralation between Jensen and Melexis NV

Assuming the 90 days trading horizon Jensen Group is expected to generate 0.87 times more return on investment than Melexis NV. However, Jensen Group is 1.14 times less risky than Melexis NV. It trades about -0.03 of its potential returns per unit of risk. Melexis NV is currently generating about -0.19 per unit of risk. If you would invest  4,380  in Jensen Group on September 4, 2024 and sell it today you would lose (220.00) from holding Jensen Group or give up 5.02% of portfolio value over 90 days.

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

Jensen Group  vs.  Melexis NV

Jensen Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Melexis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Melexis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Jensen and Melexis NV

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

The idea behind Jensen Group and Melexis 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..