Correlation Between Tubize Fin and Campine

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

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

Diversification Opportunities for Tubize Fin and Campine

0.08

Correlation Coefficient

Tubize Fin  Campine

Significant diversification

The 3 months correlation between Tubize and Campine is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tubize Fin and Campine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campine and Tubize Fin 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 Tubize Fin are associated (or correlated) with Campine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campine has no effect on the direction of Tubize Fin i.e., Tubize Fin and Campine go up and down completely randomly.

Pair Corralation between Tubize Fin and Campine

Assuming the 90 days trading horizon Tubize Fin is expected to generate 15.68 times less return on investment than Campine. But when comparing it to its historical volatility, Tubize Fin is 1.29 times less risky than Campine. It trades about 0.02 of its potential returns per unit of risk. Campine is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  7,850  in Campine on September 24, 2024 and sell it today you would earn a total of  4,050  from holding Campine or generate 51.59% return on investment over 90 days.

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

Tubize Fin  vs.  Campine

Tubize Fin

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tubize Fin are ranked lower than 1 (%) 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.

Campine

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Campine are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Campine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tubize Fin and Campine

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

The idea behind Tubize Fin and Campine 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.