Correlation Between Brockhaus Capital and Renesas Electronics

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

By analyzing existing cross correlation between Brockhaus Capital Management and Renesas Electronics, you can compare the effects of market volatilities on Brockhaus Capital and Renesas Electronics 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 Brockhaus Capital with a short position of Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brockhaus Capital and Renesas Electronics.

Diversification Opportunities for Brockhaus Capital and Renesas Electronics

-0.08

Correlation Coefficient

Brockhaus Capital  Renesas Electronics

Good diversification

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

Pair Corralation between Brockhaus Capital and Renesas Electronics

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Renesas Electronics. In addition to that, Brockhaus Capital is 1.03 times more volatile than Renesas Electronics. It trades about -0.1 of its total potential returns per unit of risk. Renesas Electronics is currently generating about 0.09 per unit of volatility. If you would invest  1,271  in Renesas Electronics on December 28, 2024 and sell it today you would earn a total of  200.00  from holding Renesas Electronics or generate 15.74% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Renesas Electronics

Brockhaus Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Renesas Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Renesas Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Renesas Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and Renesas Electronics

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

The idea behind Brockhaus Capital Management and Renesas Electronics 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.