Correlation Between Ontex Group and Exmar NV

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

Diversification Opportunities for Ontex Group and Exmar NV

0.8

Correlation Coefficient

Ontex Group  Exmar NV

Very poor diversification

The 3 months correlation between Ontex and Exmar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV 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 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 Ontex Group i.e., Ontex Group and Exmar NV go up and down completely randomly.

Pair Corralation between Ontex Group and Exmar NV

Assuming the 90 days trading horizon Ontex Group is expected to generate 9.5 times less return on investment than Exmar NV. But when comparing it to its historical volatility, Ontex Group NV is 1.82 times less risky than Exmar NV. It trades about 0.02 of its potential returns per unit of risk. Exmar NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  337.00  in Exmar NV on October 27, 2024 and sell it today you would earn a total of  807.00  from holding Exmar NV or generate 239.47% return on investment over 90 days.

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

Ontex Group NV  vs.  Exmar NV

Ontex Group NV

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ontex Group NV are ranked lower than 3 (%) 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.

Exmar NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Exmar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ontex Group and Exmar NV

The main advantage of trading using opposite Ontex Group and Exmar NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ontex Group 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 Ontex Group NV 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.