Correlation Between DIeteren Group and Brouwerij Handelsmaatschap

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

By analyzing existing cross correlation between DIeteren Group SA and Brouwerij Handelsmaatschappij NV, you can compare the effects of market volatilities on DIeteren Group and Brouwerij Handelsmaatschap 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 DIeteren Group with a short position of Brouwerij Handelsmaatschap. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and Brouwerij Handelsmaatschap.

Diversification Opportunities for DIeteren Group and Brouwerij Handelsmaatschap

-0.32

Correlation Coefficient

DIeteren Group  Brouwerij Handelsmaatschap

Very good diversification

The 3 months correlation between DIeteren and Brouwerij is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Brouwerij Handelsmaatschappij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brouwerij Handelsmaatschap and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with Brouwerij Handelsmaatschap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brouwerij Handelsmaatschap has no effect on the direction of DIeteren Group i.e., DIeteren Group and Brouwerij Handelsmaatschap go up and down completely randomly.

Pair Corralation between DIeteren Group and Brouwerij Handelsmaatschap

Assuming the 90 days trading horizon DIeteren Group SA is expected to generate 9.7 times more return on investment than Brouwerij Handelsmaatschap. However, DIeteren Group is 9.7 times more volatile than Brouwerij Handelsmaatschappij NV. It trades about 0.13 of its potential returns per unit of risk. Brouwerij Handelsmaatschappij NV is currently generating about -0.02 per unit of risk. If you would invest  5,106  in DIeteren Group SA on September 16, 2024 and sell it today you would earn a total of  11,434  from holding DIeteren Group SA or generate 223.93% return on investment over 90 days.

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

DIeteren Group SA  vs.  Brouwerij Handelsmaatschappij

DIeteren Group SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Brouwerij Handelsmaatschap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brouwerij Handelsmaatschappij NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Brouwerij Handelsmaatschap is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DIeteren Group and Brouwerij Handelsmaatschap

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

The idea behind DIeteren Group SA and Brouwerij Handelsmaatschappij 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.