Correlation Between AGFA Gevaert and Ion Beam

Can any of the company-specific risk be diversified away by investing in both AGFA Gevaert and Ion Beam 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 Ion Beam 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 Ion Beam Applications, you can compare the effects of market volatilities on AGFA Gevaert and Ion Beam 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 Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGFA Gevaert and Ion Beam.

Diversification Opportunities for AGFA Gevaert and Ion Beam

0.35

Correlation Coefficient

AGFA Gevaert  Ion Beam

Weak diversification

The 3 months correlation between AGFA and Ion is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AGFA Gevaert NV and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications 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 Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of AGFA Gevaert i.e., AGFA Gevaert and Ion Beam go up and down completely randomly.

Pair Corralation between AGFA Gevaert and Ion Beam

Assuming the 90 days trading horizon AGFA Gevaert NV is expected to generate 1.72 times more return on investment than Ion Beam. However, AGFA Gevaert is 1.72 times more volatile than Ion Beam Applications. It trades about 0.01 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.08 per unit of risk. If you would invest  79.00  in AGFA Gevaert NV on December 4, 2024 and sell it today you would lose (1.00) from holding AGFA Gevaert NV or give up 1.27% of portfolio value over 90 days.

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

AGFA Gevaert NV  vs.  Ion Beam Applications

AGFA Gevaert NV

Risk-Adjusted Performance

Weak

Over the last 90 days AGFA Gevaert NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, AGFA Gevaert is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ion Beam Applications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with AGFA Gevaert and Ion Beam

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

The idea behind AGFA Gevaert NV and Ion Beam Applications 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.