Correlation Between VGP NV and Campine

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

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

Diversification Opportunities for VGP NV and Campine

0.16

Correlation Coefficient

VGP NV  Campine

Average diversification

The 3 months correlation between VGP and Campine is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Campine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campine and VGP 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 VGP NV are associated (or correlated) with Campine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campine has no effect on the direction of VGP NV i.e., VGP NV and Campine go up and down completely randomly.

Pair Corralation between VGP NV and Campine

Assuming the 90 days trading horizon VGP NV is expected to generate 9.85 times less return on investment than Campine. But when comparing it to its historical volatility, VGP NV is 1.6 times less risky than Campine. It trades about 0.05 of its potential returns per unit of risk. Campine is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  9,050  in Campine on December 1, 2024 and sell it today you would earn a total of  5,150  from holding Campine or generate 56.91% return on investment over 90 days.

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

VGP NV  vs.  Campine

VGP NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VGP NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, VGP NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Campine

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Campine are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Campine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VGP NV and Campine

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

The idea behind VGP NV and Campine 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..