Correlation Between Exmar NV and Elia Group

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

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

Diversification Opportunities for Exmar NV and Elia Group

0.18

Correlation Coefficient

Exmar NV  Elia Group

Average diversification

The 3 months correlation between Exmar and Elia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Exmar NV and Elia Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elia Group SANV and Exmar 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 Exmar NV are associated (or correlated) with Elia Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elia Group SANV has no effect on the direction of Exmar NV i.e., Exmar NV and Elia Group go up and down completely randomly.

Pair Corralation between Exmar NV and Elia Group

Assuming the 90 days trading horizon Exmar NV is expected to generate 17.11 times less return on investment than Elia Group. But when comparing it to its historical volatility, Exmar NV is 9.36 times less risky than Elia Group. It trades about 0.06 of its potential returns per unit of risk. Elia Group SANV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,811  in Elia Group SANV on December 29, 2024 and sell it today you would earn a total of  1,364  from holding Elia Group SANV or generate 20.03% return on investment over 90 days.

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

Exmar NV  vs.  Elia Group SANV

Exmar NV

Risk-Adjusted Performance

Insignificant

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.

Elia Group SANV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elia Group SANV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Elia Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exmar NV and Elia Group

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

The idea behind Exmar NV and Elia Group SANV 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.