Correlation Between Exmar NV and Wereldhav

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

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

Diversification Opportunities for Exmar NV and Wereldhav

-0.17

Correlation Coefficient

Exmar NV  Wereldhav

Good diversification

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

Pair Corralation between Exmar NV and Wereldhav

Assuming the 90 days trading horizon Exmar NV is expected to generate 4.63 times more return on investment than Wereldhav. However, Exmar NV is 4.63 times more volatile than Wereldhav B Sicafi. It trades about 0.12 of its potential returns per unit of risk. Wereldhav B Sicafi is currently generating about -0.09 per unit of risk. If you would invest  871.00  in Exmar NV on September 14, 2024 and sell it today you would earn a total of  263.00  from holding Exmar NV or generate 30.2% 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.  Wereldhav B Sicafi

Exmar NV

Risk-Adjusted Performance

9 of 100

OK

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

Wereldhav B Sicafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wereldhav B Sicafi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wereldhav 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 Exmar NV and Wereldhav

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

The idea behind Exmar NV and Wereldhav B Sicafi 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.