Correlation Between OCI NV and Sligro Food

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

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

Diversification Opportunities for OCI NV and Sligro Food

0.66

Correlation Coefficient

OCI NV  Sligro Food

Poor diversification

The 3 months correlation between OCI and Sligro is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding OCI NV and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group and OCI 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 OCI NV are associated (or correlated) with Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of OCI NV i.e., OCI NV and Sligro Food go up and down completely randomly.

Pair Corralation between OCI NV and Sligro Food

Assuming the 90 days trading horizon OCI NV is expected to generate 1.25 times more return on investment than Sligro Food. However, OCI NV is 1.25 times more volatile than Sligro Food Group. It trades about -0.06 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.21 per unit of risk. If you would invest  1,189  in OCI NV on September 13, 2024 and sell it today you would lose (75.00) from holding OCI NV or give up 6.31% of portfolio value over 90 days.

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

OCI NV  vs.  Sligro Food Group

OCI NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, OCI NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with OCI NV and Sligro Food

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

The idea behind OCI NV and Sligro Food Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.