Correlation Between NV Bekaert and QRF SCA

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

Diversification Opportunities for NV Bekaert and QRF SCA

0.43

Correlation Coefficient

NV Bekaert  QRF SCA

Very weak diversification

The 3 months correlation between BEKB and QRF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NV Bekaert SA and QRF SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QRF SCA 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 QRF SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QRF SCA has no effect on the direction of NV Bekaert i.e., NV Bekaert and QRF SCA go up and down completely randomly.

Pair Corralation between NV Bekaert and QRF SCA

Assuming the 90 days trading horizon NV Bekaert SA is expected to under-perform the QRF SCA. But the stock apears to be less risky and, when comparing its historical volatility, NV Bekaert SA is 1.04 times less risky than QRF SCA. The stock trades about -0.03 of its potential returns per unit of risk. The QRF SCA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  933.00  in QRF SCA on October 24, 2024 and sell it today you would earn a total of  107.00  from holding QRF SCA or generate 11.47% 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.  QRF SCA

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.

QRF SCA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NV Bekaert and QRF SCA

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

The idea behind NV Bekaert SA and QRF SCA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.