Correlation Between Brunel International and NV Nederlandsche

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

Diversification Opportunities for Brunel International and NV Nederlandsche

0.77

Correlation Coefficient

Brunel International  NV Nederlandsche

Poor diversification

The 3 months correlation between Brunel and NEDAP is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Brunel International NV and NV Nederlandsche Apparatenfabr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Nederlandsche App 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 NV Nederlandsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Nederlandsche App has no effect on the direction of Brunel International i.e., Brunel International and NV Nederlandsche go up and down completely randomly.

Pair Corralation between Brunel International and NV Nederlandsche

Assuming the 90 days trading horizon Brunel International is expected to generate 1.06 times less return on investment than NV Nederlandsche. In addition to that, Brunel International is 1.39 times more volatile than NV Nederlandsche Apparatenfabriek. It trades about 0.15 of its total potential returns per unit of risk. NV Nederlandsche Apparatenfabriek is currently generating about 0.22 per unit of volatility. If you would invest  5,460  in NV Nederlandsche Apparatenfabriek on December 30, 2024 and sell it today you would earn a total of  1,060  from holding NV Nederlandsche Apparatenfabriek or generate 19.41% return on investment over 90 days.

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

Brunel International NV  vs.  NV Nederlandsche Apparatenfabr

Brunel International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brunel International NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Brunel International unveiled solid returns over the last few months and may actually be approaching a breakup point.

NV Nederlandsche App

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NV Nederlandsche Apparatenfabriek are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NV Nederlandsche sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunel International and NV Nederlandsche

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

The idea behind Brunel International NV and NV Nederlandsche Apparatenfabriek 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.