Correlation Between Materialise and Major Drilling

Can any of the company-specific risk be diversified away by investing in both Materialise and Major Drilling 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 Materialise and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Materialise NV and Major Drilling Group, you can compare the effects of market volatilities on Materialise and Major Drilling 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 Materialise with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Major Drilling.

Diversification Opportunities for Materialise and Major Drilling

0.58

Correlation Coefficient

Materialise  Major Drilling

Very weak diversification

The 3 months correlation between Materialise and Major is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and Materialise 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 Materialise NV are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Materialise i.e., Materialise and Major Drilling go up and down completely randomly.

Pair Corralation between Materialise and Major Drilling

Assuming the 90 days trading horizon Materialise NV is expected to generate 1.35 times more return on investment than Major Drilling. However, Materialise is 1.35 times more volatile than Major Drilling Group. It trades about 0.04 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest  570.00  in Materialise NV on October 2, 2024 and sell it today you would earn a total of  105.00  from holding Materialise NV or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Materialise NV  vs.  Major Drilling Group

Materialise NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Major Drilling Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Major Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Materialise and Major Drilling

The main advantage of trading using opposite Materialise and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.

The idea behind Materialise NV and Major Drilling Group 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.