Correlation Between Scheerders Van and DEME Group

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

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

Diversification Opportunities for Scheerders Van and DEME Group

-0.36

Correlation Coefficient

Scheerders Van  DEME Group

Very good diversification

The 3 months correlation between Scheerders and DEME is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Scheerders van Kerchoves and DEME Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEME Group NV and Scheerders Van 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 Scheerders van Kerchoves are associated (or correlated) with DEME Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEME Group NV has no effect on the direction of Scheerders Van i.e., Scheerders Van and DEME Group go up and down completely randomly.

Pair Corralation between Scheerders Van and DEME Group

Assuming the 90 days trading horizon Scheerders van Kerchoves is expected to under-perform the DEME Group. In addition to that, Scheerders Van is 2.85 times more volatile than DEME Group NV. It trades about -0.04 of its total potential returns per unit of risk. DEME Group NV is currently generating about 0.26 per unit of volatility. If you would invest  12,920  in DEME Group NV on September 12, 2024 and sell it today you would earn a total of  1,820  from holding DEME Group NV or generate 14.09% return on investment over 90 days.

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

Scheerders van Kerchoves  vs.  DEME Group NV

Scheerders van Kerchoves

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scheerders van Kerchoves are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Scheerders Van reported solid returns over the last few months and may actually be approaching a breakup point.

DEME Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEME Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, DEME Group 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 Scheerders Van and DEME Group

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

The idea behind Scheerders van Kerchoves and DEME Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.