Correlation Between Van De and Fluxys Belgium

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

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

Diversification Opportunities for Van De and Fluxys Belgium

0.33

Correlation Coefficient

Van De  Fluxys Belgium

Weak diversification

The 3 months correlation between Van and Fluxys is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Van de Velde and Fluxys Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluxys Belgium and Van De 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 Van de Velde are associated (or correlated) with Fluxys Belgium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluxys Belgium has no effect on the direction of Van De i.e., Van De and Fluxys Belgium go up and down completely randomly.

Pair Corralation between Van De and Fluxys Belgium

Assuming the 90 days trading horizon Van de Velde is expected to generate 0.3 times more return on investment than Fluxys Belgium. However, Van de Velde is 3.37 times less risky than Fluxys Belgium. It trades about -0.03 of its potential returns per unit of risk. Fluxys Belgium is currently generating about -0.01 per unit of risk. If you would invest  3,010  in Van de Velde on September 17, 2024 and sell it today you would lose (55.00) from holding Van de Velde or give up 1.83% of portfolio value over 90 days.

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

Van de Velde  vs.  Fluxys Belgium

Van de Velde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van de Velde has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Fluxys Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluxys Belgium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fluxys Belgium 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 Van De and Fluxys Belgium

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

The idea behind Van de Velde and Fluxys Belgium 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.