Correlation Between Nyrstar NV and Tubize Fin

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

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

Diversification Opportunities for Nyrstar NV and Tubize Fin

0.52

Correlation Coefficient

Nyrstar NV  Tubize Fin

Very weak diversification

The 3 months correlation between Nyrstar and Tubize is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nyrstar NV and Tubize Fin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubize Fin and Nyrstar 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 Nyrstar NV are associated (or correlated) with Tubize Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubize Fin has no effect on the direction of Nyrstar NV i.e., Nyrstar NV and Tubize Fin go up and down completely randomly.

Pair Corralation between Nyrstar NV and Tubize Fin

Assuming the 90 days trading horizon Nyrstar NV is expected to generate 5.41 times more return on investment than Tubize Fin. However, Nyrstar NV is 5.41 times more volatile than Tubize Fin. It trades about 0.14 of its potential returns per unit of risk. Tubize Fin is currently generating about 0.03 per unit of risk. If you would invest  4.00  in Nyrstar NV on September 14, 2024 and sell it today you would earn a total of  3.10  from holding Nyrstar NV or generate 77.5% return on investment over 90 days.

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

Nyrstar NV  vs.  Tubize Fin

Nyrstar NV

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nyrstar NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nyrstar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Tubize Fin

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tubize Fin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Tubize Fin is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nyrstar NV and Tubize Fin

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

The idea behind Nyrstar NV and Tubize Fin 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.