Correlation Between TronicS Microsystems and Melexis NV
Can any of the company-specific risk be diversified away by investing in both TronicS Microsystems and Melexis NV 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 TronicS Microsystems and Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TronicS Microsystems SA and Melexis NV, you can compare the effects of market volatilities on TronicS Microsystems and Melexis NV 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 TronicS Microsystems with a short position of Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of TronicS Microsystems and Melexis NV.
Diversification Opportunities for TronicS Microsystems and Melexis NV
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TronicS and Melexis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TronicS Microsystems SA and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and TronicS Microsystems 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 TronicS Microsystems SA are associated (or correlated) with Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of TronicS Microsystems i.e., TronicS Microsystems and Melexis NV go up and down completely randomly.
Pair Corralation between TronicS Microsystems and Melexis NV
Assuming the 90 days trading horizon TronicS Microsystems SA is expected to generate 2.25 times more return on investment than Melexis NV. However, TronicS Microsystems is 2.25 times more volatile than Melexis NV. It trades about -0.02 of its potential returns per unit of risk. Melexis NV is currently generating about -0.16 per unit of risk. If you would invest 466.00 in TronicS Microsystems SA on September 12, 2024 and sell it today you would lose (64.00) from holding TronicS Microsystems SA or give up 13.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
TronicS Microsystems SA vs. Melexis NV
Performance |
| Timeline |
| TronicS Microsystems |
| Melexis NV |
TronicS Microsystems and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TronicS Microsystems and Melexis NV
The main advantage of trading using opposite TronicS Microsystems and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TronicS Microsystems position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.| TronicS Microsystems vs. Memscap Regpt | TronicS Microsystems vs. Intrasense | TronicS Microsystems vs. Linedata Services SA |
| Melexis NV vs. Ackermans Van Haaren | Melexis NV vs. Sofina Socit Anonyme | Melexis NV vs. ageas SANV | Melexis NV vs. Barco NV |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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