Correlation Between Brunel International and Avantium Holding

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

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

Diversification Opportunities for Brunel International and Avantium Holding

-0.15

Correlation Coefficient

Brunel International  Avantium Holding

Good diversification

The 3 months correlation between Brunel and Avantium is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Brunel International NV and Avantium Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantium Holding and Brunel International 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 Brunel International NV are associated (or correlated) with Avantium Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantium Holding has no effect on the direction of Brunel International i.e., Brunel International and Avantium Holding go up and down completely randomly.

Pair Corralation between Brunel International and Avantium Holding

Assuming the 90 days trading horizon Brunel International NV is expected to generate 0.82 times more return on investment than Avantium Holding. However, Brunel International NV is 1.22 times less risky than Avantium Holding. It trades about 0.27 of its potential returns per unit of risk. Avantium Holding BV is currently generating about 0.02 per unit of risk. If you would invest  910.00  in Brunel International NV on October 10, 2024 and sell it today you would earn a total of  74.00  from holding Brunel International NV or generate 8.13% return on investment over 90 days.

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

Brunel International NV  vs.  Avantium Holding BV

Brunel International

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brunel International NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brunel International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Avantium Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantium Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Brunel International and Avantium Holding

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

The idea behind Brunel International NV and Avantium Holding BV 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.