Correlation Between Barco NV and Memscap Regpt

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

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

Diversification Opportunities for Barco NV and Memscap Regpt

-0.27

Correlation Coefficient

Barco NV  Memscap Regpt

Very good diversification

The 3 months correlation between Barco and Memscap is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Barco NV and Memscap Regpt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Memscap Regpt and Barco 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 Barco NV are associated (or correlated) with Memscap Regpt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Memscap Regpt has no effect on the direction of Barco NV i.e., Barco NV and Memscap Regpt go up and down completely randomly.

Pair Corralation between Barco NV and Memscap Regpt

Assuming the 90 days trading horizon Barco NV is expected to generate 0.51 times more return on investment than Memscap Regpt. However, Barco NV is 1.96 times less risky than Memscap Regpt. It trades about 0.11 of its potential returns per unit of risk. Memscap Regpt is currently generating about -0.02 per unit of risk. If you would invest  1,027  in Barco NV on December 30, 2024 and sell it today you would earn a total of  178.00  from holding Barco NV or generate 17.33% return on investment over 90 days.

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

Barco NV  vs.  Memscap Regpt

Barco NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barco NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Barco NV reported solid returns over the last few months and may actually be approaching a breakup point.

Memscap Regpt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Memscap Regpt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Memscap Regpt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barco NV and Memscap Regpt

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

The idea behind Barco NV and Memscap Regpt 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.