Correlation Between Ontex Group and Wereldhav

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

Diversification Opportunities for Ontex Group and Wereldhav

0.3

Correlation Coefficient

Ontex Group  Wereldhav

Weak diversification

The 3 months correlation between Ontex and Wereldhav is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and Wereldhav B Sicafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wereldhav B Sicafi 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 Wereldhav. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wereldhav B Sicafi has no effect on the direction of Ontex Group i.e., Ontex Group and Wereldhav go up and down completely randomly.

Pair Corralation between Ontex Group and Wereldhav

Assuming the 90 days trading horizon Ontex Group NV is expected to generate 1.05 times more return on investment than Wereldhav. However, Ontex Group is 1.05 times more volatile than Wereldhav B Sicafi. It trades about 0.03 of its potential returns per unit of risk. Wereldhav B Sicafi is currently generating about 0.02 per unit of risk. If you would invest  700.00  in Ontex Group NV on October 7, 2024 and sell it today you would earn a total of  127.00  from holding Ontex Group NV or generate 18.14% return on investment over 90 days.

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

Ontex Group NV  vs.  Wereldhav B Sicafi

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.

Wereldhav B Sicafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wereldhav B Sicafi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wereldhav 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 Wereldhav

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

The idea behind Ontex Group NV and Wereldhav B Sicafi 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.