Correlation Between Sipef NV and Warehouses

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

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

Diversification Opportunities for Sipef NV and Warehouses

0.5

Correlation Coefficient

Sipef NV  Warehouses

Very weak diversification

The 3 months correlation between Sipef and Warehouses is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sipef NV and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw 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 Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Sipef NV i.e., Sipef NV and Warehouses go up and down completely randomly.

Pair Corralation between Sipef NV and Warehouses

Assuming the 90 days trading horizon Sipef NV is expected to generate 0.68 times more return on investment than Warehouses. However, Sipef NV is 1.47 times less risky than Warehouses. It trades about 0.1 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about 0.01 per unit of risk. If you would invest  5,620  in Sipef NV on December 2, 2024 and sell it today you would earn a total of  320.00  from holding Sipef NV or generate 5.69% 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.  Warehouses de Pauw

Sipef NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sipef NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Sipef NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Warehouses de Pauw

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Sipef NV and Warehouses de Pauw 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.