Correlation Between Fountain and Campine
Can any of the company-specific risk be diversified away by investing in both Fountain 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 Fountain and Campine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fountain and Campine, you can compare the effects of market volatilities on Fountain 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 Fountain with a short position of Campine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fountain and Campine.
Diversification Opportunities for Fountain and Campine
Very good diversification
The 3 months correlation between Fountain and Campine is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fountain and Campine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campine and Fountain 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 Fountain 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 Fountain i.e., Fountain and Campine go up and down completely randomly.
Pair Corralation between Fountain and Campine
Assuming the 90 days trading horizon Fountain is expected to under-perform the Campine. In addition to that, Fountain is 2.01 times more volatile than Campine. It trades about -0.09 of its total potential returns per unit of risk. Campine is currently generating about 0.3 per unit of volatility. If you would invest 8,250 in Campine on September 2, 2024 and sell it today you would earn a total of 700.00 from holding Campine or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fountain vs. Campine
Performance |
| Timeline |
| Fountain |
| Campine |
Fountain and Campine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fountain and Campine
The main advantage of trading using opposite Fountain and Campine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fountain 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 Fountain 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.| Campine vs. Miko NV | Campine vs. Tessenderlo | Campine vs. Van de Velde | Campine vs. EVS Broadcast Equipment |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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