Correlation Between Compagnie and Brouwerij Handelsmaatschap
Can any of the company-specific risk be diversified away by investing in both Compagnie and Brouwerij Handelsmaatschap 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 Compagnie and Brouwerij Handelsmaatschap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie du Bois and Brouwerij Handelsmaatschappij NV, you can compare the effects of market volatilities on Compagnie and Brouwerij Handelsmaatschap 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 Compagnie with a short position of Brouwerij Handelsmaatschap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Brouwerij Handelsmaatschap.
Diversification Opportunities for Compagnie and Brouwerij Handelsmaatschap
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compagnie and Brouwerij is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Bois and Brouwerij Handelsmaatschappij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brouwerij Handelsmaatschap and Compagnie 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 Compagnie du Bois are associated (or correlated) with Brouwerij Handelsmaatschap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brouwerij Handelsmaatschap has no effect on the direction of Compagnie i.e., Compagnie and Brouwerij Handelsmaatschap go up and down completely randomly.
Pair Corralation between Compagnie and Brouwerij Handelsmaatschap
Assuming the 90 days trading horizon Compagnie du Bois is expected to under-perform the Brouwerij Handelsmaatschap. But the stock apears to be less risky and, when comparing its historical volatility, Compagnie du Bois is 1.28 times less risky than Brouwerij Handelsmaatschap. The stock trades about -0.12 of its potential returns per unit of risk. The Brouwerij Handelsmaatschappij NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 183,000 in Brouwerij Handelsmaatschappij NV on August 31, 2024 and sell it today you would lose (21,000) from holding Brouwerij Handelsmaatschappij NV or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie du Bois vs. Brouwerij Handelsmaatschappij
Performance |
| Timeline |
| Compagnie du Bois |
| Brouwerij Handelsmaatschap |
Compagnie and Brouwerij Handelsmaatschap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Brouwerij Handelsmaatschap
The main advantage of trading using opposite Compagnie and Brouwerij Handelsmaatschap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Brouwerij Handelsmaatschap 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 Brouwerij Handelsmaatschap will offset losses from the drop in Brouwerij Handelsmaatschap's long position.| Compagnie vs. Brederode SA | Compagnie vs. GIMV NV | Compagnie vs. Ackermans Van Haaren | Compagnie vs. Groep Brussel Lambert |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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