Correlation Between CoreCard Corp and Materialise

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

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

Diversification Opportunities for CoreCard Corp and Materialise

0.95

Correlation Coefficient

CoreCard Corp  Materialise

Almost no diversification

The 3 months correlation between CoreCard and Materialise is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CoreCard Corp and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and CoreCard Corp 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 CoreCard Corp are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of CoreCard Corp i.e., CoreCard Corp and Materialise go up and down completely randomly.

Pair Corralation between CoreCard Corp and Materialise

Given the investment horizon of 90 days CoreCard Corp is expected to generate 0.67 times more return on investment than Materialise. However, CoreCard Corp is 1.5 times less risky than Materialise. It trades about 0.35 of its potential returns per unit of risk. Materialise NV is currently generating about 0.14 per unit of risk. If you would invest  1,502  in CoreCard Corp on October 1, 2024 and sell it today you would earn a total of  608.00  from holding CoreCard Corp or generate 40.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.62%
Values	Daily Returns

CoreCard Corp  vs.  Materialise NV

CoreCard Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCard Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CoreCard Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Materialise NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CoreCard Corp and Materialise

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

The idea behind CoreCard Corp and Materialise NV 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.