Correlation Between Exmar NV and VGP NV

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

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

Diversification Opportunities for Exmar NV and VGP NV

-0.17

Correlation Coefficient

Exmar NV  VGP NV

Good diversification

The 3 months correlation between Exmar and VGP is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Exmar NV and VGP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VGP NV and Exmar NV 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 Exmar NV are associated (or correlated) with VGP NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VGP NV has no effect on the direction of Exmar NV i.e., Exmar NV and VGP NV go up and down completely randomly.

Pair Corralation between Exmar NV and VGP NV

Assuming the 90 days trading horizon Exmar NV is expected to generate 11.32 times less return on investment than VGP NV. But when comparing it to its historical volatility, Exmar NV is 4.63 times less risky than VGP NV. It trades about 0.06 of its potential returns per unit of risk. VGP NV is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,010  in VGP NV on December 29, 2024 and sell it today you would earn a total of  1,000.00  from holding VGP NV or generate 14.27% return on investment over 90 days.

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

Exmar NV  vs.  VGP NV

Exmar NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Exmar NV is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

VGP NV

Risk-Adjusted Performance

Good

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

Pair Trading with Exmar NV and VGP NV

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

The idea behind Exmar NV and VGP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.