Correlation Between Jensen and Sipef NV

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

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

Diversification Opportunities for Jensen and Sipef NV

0.87

Correlation Coefficient

Jensen  Sipef NV

Very poor diversification

The 3 months correlation between Jensen and Sipef is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jensen Group and Sipef NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sipef NV and Jensen 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 Jensen Group are associated (or correlated) with Sipef NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sipef NV has no effect on the direction of Jensen i.e., Jensen and Sipef NV go up and down completely randomly.

Pair Corralation between Jensen and Sipef NV

Assuming the 90 days trading horizon Jensen Group is expected to generate 1.73 times more return on investment than Sipef NV. However, Jensen is 1.73 times more volatile than Sipef NV. It trades about 0.13 of its potential returns per unit of risk. Sipef NV is currently generating about 0.16 per unit of risk. If you would invest  4,370  in Jensen Group on December 29, 2024 and sell it today you would earn a total of  480.00  from holding Jensen Group or generate 10.98% return on investment over 90 days.

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

Jensen Group  vs.  Sipef NV

Jensen Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jensen Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Jensen may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sipef NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sipef NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sipef NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Jensen and Sipef NV

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

The idea behind Jensen Group and Sipef 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.