Correlation Between NV Bekaert and Campine

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

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

Diversification Opportunities for NV Bekaert and Campine

-0.08

Correlation Coefficient

NV Bekaert  Campine

Good diversification

The 3 months correlation between BEKB and Campine is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Campine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campine and NV Bekaert 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 NV Bekaert SA are associated (or correlated) with Campine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campine has no effect on the direction of NV Bekaert i.e., NV Bekaert and Campine go up and down completely randomly.

Pair Corralation between NV Bekaert and Campine

Assuming the 90 days trading horizon NV Bekaert SA is expected to under-perform the Campine. But the stock apears to be less risky and, when comparing its historical volatility, NV Bekaert SA is 1.53 times less risky than Campine. The stock trades about -0.02 of its potential returns per unit of risk. The Campine is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  8,850  in Campine on October 20, 2024 and sell it today you would earn a total of  5,150  from holding Campine or generate 58.19% return on investment over 90 days.

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

NV Bekaert SA  vs.  Campine

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NV Bekaert is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Campine

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Campine are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Campine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NV Bekaert and Campine

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

The idea behind NV Bekaert SA and Campine 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.