Correlation Between NV Bekaert and Fountain

Can any of the company-specific risk be diversified away by investing in both NV Bekaert and Fountain 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 Fountain 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 Fountain, you can compare the effects of market volatilities on NV Bekaert and Fountain 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 Fountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Bekaert and Fountain.

Diversification Opportunities for NV Bekaert and Fountain

0.45

Correlation Coefficient

NV Bekaert  Fountain

Very weak diversification

The 3 months correlation between BEKB and Fountain is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and Fountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountain 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 Fountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountain has no effect on the direction of NV Bekaert i.e., NV Bekaert and Fountain go up and down completely randomly.

Pair Corralation between NV Bekaert and Fountain

Assuming the 90 days trading horizon NV Bekaert is expected to generate 10.82 times less return on investment than Fountain. But when comparing it to its historical volatility, NV Bekaert SA is 3.09 times less risky than Fountain. It trades about 0.01 of its potential returns per unit of risk. Fountain is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Fountain on October 23, 2024 and sell it today you would earn a total of  1.00  from holding Fountain or generate 0.68% return on investment over 90 days.

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

NV Bekaert SA  vs.  Fountain

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.

Fountain

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fountain are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fountain may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NV Bekaert and Fountain

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

The idea behind NV Bekaert SA and Fountain 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..