Correlation Between Melexis NV and DIeteren Group
Can any of the company-specific risk be diversified away by investing in both Melexis NV and DIeteren Group 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 DIeteren Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and DIeteren Group SA, you can compare the effects of market volatilities on Melexis NV and DIeteren Group 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 DIeteren Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and DIeteren Group.
Diversification Opportunities for Melexis NV and DIeteren Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Melexis and DIeteren is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and DIeteren Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIeteren Group SA 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 DIeteren Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIeteren Group SA has no effect on the direction of Melexis NV i.e., Melexis NV and DIeteren Group go up and down completely randomly.
Pair Corralation between Melexis NV and DIeteren Group
Assuming the 90 days trading horizon Melexis NV is expected to generate 2.29 times more return on investment than DIeteren Group. However, Melexis NV is 2.29 times more volatile than DIeteren Group SA. It trades about 0.1 of its potential returns per unit of risk. DIeteren Group SA is currently generating about -0.06 per unit of risk. If you would invest 7,367 in Melexis NV on March 5, 2024 and sell it today you would earn a total of 898.00 from holding Melexis NV or generate 12.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Melexis NV vs. DIeteren Group SA
Performance |
Timeline |
Melexis NV |
DIeteren Group SA |
Melexis NV and DIeteren Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Melexis NV and DIeteren Group
The main advantage of trading using opposite Melexis NV and DIeteren Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, DIeteren Group 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 DIeteren Group will offset losses from the drop in DIeteren Group'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 |
DIeteren Group vs. Ackermans Van Haaren | DIeteren Group vs. Sofina Socit Anonyme | DIeteren Group vs. Groep Brussel Lambert | DIeteren Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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