Correlation Between Sipef NV and Van De

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

By analyzing existing cross correlation between Sipef NV and Van de Velde, you can compare the effects of market volatilities on Sipef NV and Van De 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 Van De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sipef NV and Van De.

Diversification Opportunities for Sipef NV and Van De

0.58

Correlation Coefficient

Sipef NV  Van De

Very weak diversification

The 3 months correlation between Sipef and Van is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sipef NV and Van de Velde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van de Velde 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 Van De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van de Velde has no effect on the direction of Sipef NV i.e., Sipef NV and Van De go up and down completely randomly.

Pair Corralation between Sipef NV and Van De

Assuming the 90 days trading horizon Sipef NV is expected to generate 0.84 times more return on investment than Van De. However, Sipef NV is 1.18 times less risky than Van De. It trades about 0.16 of its potential returns per unit of risk. Van de Velde is currently generating about 0.11 per unit of risk. If you would invest  5,680  in Sipef NV on December 28, 2024 and sell it today you would earn a total of  440.00  from holding Sipef NV or generate 7.75% return on investment over 90 days.

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

Sipef NV  vs.  Van de Velde

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.

Van de Velde

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Van de Velde are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Van De 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 Sipef NV and Van De

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

The idea behind Sipef NV and Van de Velde 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.