Correlation Between DIeteren Group and Tubize Fin

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

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

Diversification Opportunities for DIeteren Group and Tubize Fin

0.79

Correlation Coefficient

DIeteren Group  Tubize Fin

Poor diversification

The 3 months correlation between DIeteren and Tubize is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Tubize Fin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubize Fin and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with Tubize Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubize Fin has no effect on the direction of DIeteren Group i.e., DIeteren Group and Tubize Fin go up and down completely randomly.

Pair Corralation between DIeteren Group and Tubize Fin

Assuming the 90 days trading horizon DIeteren Group is expected to generate 1.81 times less return on investment than Tubize Fin. But when comparing it to its historical volatility, DIeteren Group SA is 1.28 times less risky than Tubize Fin. It trades about 0.17 of its potential returns per unit of risk. Tubize Fin is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,417  in Tubize Fin on February 3, 2024 and sell it today you would earn a total of  2,103  from holding Tubize Fin or generate 28.35% return on investment over 90 days.

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

DIeteren Group SA  vs.  Tubize Fin

DIeteren Group SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIeteren Group SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, DIeteren Group reported solid returns over the last few months and may actually be approaching a breakup point.

Tubize Fin

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tubize Fin are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Tubize Fin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DIeteren Group and Tubize Fin

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

The idea behind DIeteren Group SA and Tubize Fin 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.