Correlation Between Sipef NV and EVS Broadcast

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

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

Diversification Opportunities for Sipef NV and EVS Broadcast

0.94

Correlation Coefficient

Sipef NV  EVS Broadcast

Almost no diversification

The 3 months correlation between Sipef and EVS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sipef 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 Sipef NV 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 Sipef 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 Sipef NV i.e., Sipef NV and EVS Broadcast go up and down completely randomly.

Pair Corralation between Sipef NV and EVS Broadcast

Assuming the 90 days trading horizon Sipef NV is expected to generate 2.8 times less return on investment than EVS Broadcast. But when comparing it to its historical volatility, Sipef NV is 2.12 times less risky than EVS Broadcast. It trades about 0.16 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,090  in EVS Broadcast Equipment on December 28, 2024 and sell it today you would earn a total of  705.00  from holding EVS Broadcast Equipment or generate 22.82% return on investment over 90 days.

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

Sipef NV  vs.  EVS Broadcast Equipment

Sipef NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sipef NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sipef NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 16 (%) 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 Sipef NV and EVS Broadcast

The main advantage of trading using opposite Sipef NV and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sipef NV 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 Sipef 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.