Correlation Between Melexis NV and Sidetrade
Can any of the company-specific risk be diversified away by investing in both Melexis NV and Sidetrade 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 Melexis NV and Sidetrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Sidetrade, you can compare the effects of market volatilities on Melexis NV and Sidetrade 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 Melexis NV with a short position of Sidetrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Sidetrade.
Diversification Opportunities for Melexis NV and Sidetrade
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Melexis and Sidetrade is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Sidetrade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidetrade and Melexis NV 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 Melexis NV are associated (or correlated) with Sidetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidetrade has no effect on the direction of Melexis NV i.e., Melexis NV and Sidetrade go up and down completely randomly.
Pair Corralation between Melexis NV and Sidetrade
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the Sidetrade. But the stock apears to be less risky and, when comparing its historical volatility, Melexis NV is 1.1 times less risky than Sidetrade. The stock trades about -0.16 of its potential returns per unit of risk. The Sidetrade is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 19,350 in Sidetrade on September 5, 2024 and sell it today you would earn a total of 2,850 from holding Sidetrade or generate 14.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melexis NV vs. Sidetrade
Performance |
| Timeline |
| Melexis NV |
| Sidetrade |
Melexis NV and Sidetrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and Sidetrade
The main advantage of trading using opposite Melexis NV and Sidetrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, Sidetrade 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 Sidetrade will offset losses from the drop in Sidetrade's long position.| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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