Correlation Between Ontex Group and EVS Broadcast

Can any of the company-specific risk be diversified away by investing in both Ontex Group and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Ontex Group and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ontex Group and EVS Broadcast.

Diversification Opportunities for Ontex Group and EVS Broadcast

0.4

Correlation Coefficient

Ontex Group  EVS Broadcast

Very weak diversification

The 3 months correlation between Ontex and EVS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Ontex Group i.e., Ontex Group and EVS Broadcast go up and down completely randomly.

Pair Corralation between Ontex Group and EVS Broadcast

Assuming the 90 days trading horizon Ontex Group is expected to generate 3.55 times less return on investment than EVS Broadcast. But when comparing it to its historical volatility, Ontex Group NV is 1.67 times less risky than EVS Broadcast. It trades about 0.12 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,140  in EVS Broadcast Equipment on December 4, 2024 and sell it today you would earn a total of  445.00  from holding EVS Broadcast Equipment or generate 14.17% return on investment over 90 days.

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

Ontex Group NV  vs.  EVS Broadcast Equipment

Ontex Group NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ontex Group NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EVS Broadcast reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ontex Group and EVS Broadcast

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

The idea behind Ontex Group NV and EVS Broadcast Equipment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.