Correlation Between Ontex Group and NV Bekaert

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

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

Diversification Opportunities for Ontex Group and NV Bekaert

0.88

Correlation Coefficient

Ontex Group  NV Bekaert

Very poor diversification

The 3 months correlation between Ontex and BEKB is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Ontex Group 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 Ontex Group NV are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Ontex Group i.e., Ontex Group and NV Bekaert go up and down completely randomly.

Pair Corralation between Ontex Group and NV Bekaert

Assuming the 90 days trading horizon Ontex Group NV is expected to under-perform the NV Bekaert. But the stock apears to be less risky and, when comparing its historical volatility, Ontex Group NV is 1.01 times less risky than NV Bekaert. The stock trades about -0.05 of its potential returns per unit of risk. The NV Bekaert SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,462  in NV Bekaert SA on September 15, 2024 and sell it today you would lose (128.00) from holding NV Bekaert SA or give up 3.7% of portfolio value over 90 days.

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

Ontex Group NV  vs.  NV Bekaert SA

Ontex Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontex Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Ontex Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NV Bekaert 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 Ontex Group and NV Bekaert

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

The idea behind Ontex Group NV and NV Bekaert SA 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.