Correlation Between VGP NV and Deceuninck
Can any of the company-specific risk be diversified away by investing in both VGP NV and Deceuninck 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 VGP NV and Deceuninck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGP NV and Deceuninck, you can compare the effects of market volatilities on VGP NV and Deceuninck 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 VGP NV with a short position of Deceuninck. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGP NV and Deceuninck.
Diversification Opportunities for VGP NV and Deceuninck
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VGP and Deceuninck is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Deceuninck in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deceuninck and VGP 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 VGP NV are associated (or correlated) with Deceuninck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deceuninck has no effect on the direction of VGP NV i.e., VGP NV and Deceuninck go up and down completely randomly.
Pair Corralation between VGP NV and Deceuninck
Assuming the 90 days trading horizon VGP NV is expected to under-perform the Deceuninck. In addition to that, VGP NV is 1.21 times more volatile than Deceuninck. It trades about -0.02 of its total potential returns per unit of risk. Deceuninck is currently generating about 0.02 per unit of volatility. If you would invest 218.00 in Deceuninck on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Deceuninck or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VGP NV vs. Deceuninck
Performance |
| Timeline |
| VGP NV |
| Deceuninck |
VGP NV and Deceuninck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VGP NV and Deceuninck
The main advantage of trading using opposite VGP NV and Deceuninck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGP NV position performs unexpectedly, Deceuninck 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 Deceuninck will offset losses from the drop in Deceuninck's long position.The idea behind VGP NV and Deceuninck 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.| Deceuninck vs. NV Bekaert SA | Deceuninck vs. Tessenderlo | Deceuninck vs. Barco NV | Deceuninck 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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