Correlation Between Motor Oil and Deceuninck

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

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

Diversification Opportunities for Motor Oil and Deceuninck

0.04

Correlation Coefficient

Motor Oil  Deceuninck

Significant diversification

The 3 months correlation between Motor and Deceuninck is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Corinth and Deceuninck in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deceuninck and Motor Oil 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 Motor Oil Corinth are associated (or correlated) with Deceuninck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deceuninck has no effect on the direction of Motor Oil i.e., Motor Oil and Deceuninck go up and down completely randomly.

Pair Corralation between Motor Oil and Deceuninck

Assuming the 90 days trading horizon Motor Oil Corinth is expected to generate 0.73 times more return on investment than Deceuninck. However, Motor Oil Corinth is 1.37 times less risky than Deceuninck. It trades about 0.14 of its potential returns per unit of risk. Deceuninck is currently generating about -0.07 per unit of risk. If you would invest  2,064  in Motor Oil Corinth on December 31, 2024 and sell it today you would earn a total of  224.00  from holding Motor Oil Corinth or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Motor Oil Corinth  vs.  Deceuninck

Motor Oil Corinth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Motor Oil may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Deceuninck

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deceuninck has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Motor Oil and Deceuninck

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

The idea behind Motor Oil Corinth and Deceuninck 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.