Correlation Between Montea CVA and Exmar NV

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

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

Diversification Opportunities for Montea CVA and Exmar NV

-0.11

Correlation Coefficient

Montea CVA  Exmar NV

Good diversification

The 3 months correlation between Montea and Exmar is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Montea CVA and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV and Montea CVA 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 Montea CVA are associated (or correlated) with Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of Montea CVA i.e., Montea CVA and Exmar NV go up and down completely randomly.

Pair Corralation between Montea CVA and Exmar NV

Assuming the 90 days trading horizon Montea CVA is expected to generate 4.17 times more return on investment than Exmar NV. However, Montea CVA is 4.17 times more volatile than Exmar NV. It trades about 0.07 of its potential returns per unit of risk. Exmar NV is currently generating about 0.06 per unit of risk. If you would invest  6,320  in Montea CVA on December 30, 2024 and sell it today you would earn a total of  380.00  from holding Montea CVA or generate 6.01% return on investment over 90 days.

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

Montea CVA  vs.  Exmar NV

Montea CVA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Montea CVA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Montea CVA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Montea CVA and Exmar NV

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

The idea behind Montea CVA and Exmar 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.