Correlation Between Van De and NV Bekaert

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

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

Diversification Opportunities for Van De and NV Bekaert

0.44

Correlation Coefficient

Van De  NV Bekaert

Very weak diversification

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

Pair Corralation between Van De and NV Bekaert

Assuming the 90 days trading horizon Van de Velde is expected to generate 0.87 times more return on investment than NV Bekaert. However, Van de Velde is 1.14 times less risky than NV Bekaert. It trades about -0.07 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.14 per unit of risk. If you would invest  3,314  in Van de Velde on September 24, 2024 and sell it today you would lose (449.00) from holding Van de Velde or give up 13.55% of portfolio value over 90 days.

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

Van de Velde  vs.  NV Bekaert SA

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 relatively invariable basic indicators, Van De is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA 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 Van De and NV Bekaert

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

The idea behind Van de Velde and NV Bekaert SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.