Correlation Between Melexis NV and Van De

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

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

Diversification Opportunities for Melexis NV and Van De

0.44

Correlation Coefficient

Melexis NV  Van De

Very weak diversification

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

Pair Corralation between Melexis NV and Van De

Assuming the 90 days trading horizon Melexis NV is expected to under-perform the Van De. In addition to that, Melexis NV is 2.25 times more volatile than Van de Velde. It trades about -0.22 of its total potential returns per unit of risk. Van de Velde is currently generating about -0.12 per unit of volatility. If you would invest  3,135  in Van de Velde on September 2, 2024 and sell it today you would lose (235.00) from holding Van de Velde or give up 7.5% of portfolio value over 90 days.

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

Melexis NV  vs.  Van de Velde

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.

Van de Velde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van de Velde has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Melexis NV and Van De

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

The idea behind Melexis NV and Van de Velde 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.