Correlation Between Materialise and THRACE PLASTICS

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

By analyzing existing cross correlation between Materialise NV and THRACE PLASTICS, you can compare the effects of market volatilities on Materialise and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and THRACE PLASTICS.

Diversification Opportunities for Materialise and THRACE PLASTICS

0.68

Correlation Coefficient

Materialise  THRACE PLASTICS

Poor diversification

The 3 months correlation between Materialise and THRACE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of Materialise i.e., Materialise and THRACE PLASTICS go up and down completely randomly.

Pair Corralation between Materialise and THRACE PLASTICS

Assuming the 90 days trading horizon Materialise NV is expected to generate 4.16 times more return on investment than THRACE PLASTICS. However, Materialise is 4.16 times more volatile than THRACE PLASTICS. It trades about 0.06 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about -0.04 per unit of risk. If you would invest  700.00  in Materialise NV on September 23, 2024 and sell it today you would earn a total of  25.00  from holding Materialise NV or generate 3.57% return on investment over 90 days.

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

Materialise NV  vs.  THRACE PLASTICS

Materialise NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 15 (%) 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.

THRACE PLASTICS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THRACE PLASTICS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Materialise and THRACE PLASTICS

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

The idea behind Materialise NV and THRACE PLASTICS 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.