Correlation Between AGFA Gevaert and Exmar NV

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

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

Diversification Opportunities for AGFA Gevaert and Exmar NV

0.08

Correlation Coefficient

AGFA Gevaert  Exmar NV

Significant diversification

The 3 months correlation between AGFA and Exmar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AGFA Gevaert NV and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV and AGFA Gevaert 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 AGFA Gevaert NV are associated (or correlated) with Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of AGFA Gevaert i.e., AGFA Gevaert and Exmar NV go up and down completely randomly.

Pair Corralation between AGFA Gevaert and Exmar NV

Assuming the 90 days trading horizon AGFA Gevaert NV is expected to generate 9.51 times more return on investment than Exmar NV. However, AGFA Gevaert is 9.51 times more volatile than Exmar NV. It trades about 0.15 of its potential returns per unit of risk. Exmar NV is currently generating about 0.06 per unit of risk. If you would invest  72.00  in AGFA Gevaert NV on December 28, 2024 and sell it today you would earn a total of  22.00  from holding AGFA Gevaert NV or generate 30.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

AGFA Gevaert NV  vs.  Exmar NV

AGFA Gevaert NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGFA Gevaert NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, AGFA Gevaert reported solid returns over the last few months and may actually be approaching a breakup point.

Exmar NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Exmar NV is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AGFA Gevaert and Exmar NV

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

The idea behind AGFA Gevaert NV and Exmar NV 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.