Correlation Between Groep Brussel and AGFA Gevaert

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

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

Diversification Opportunities for Groep Brussel and AGFA Gevaert

0.84

Correlation Coefficient

Groep Brussel  AGFA Gevaert

Very poor diversification

The 3 months correlation between Groep and AGFA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and AGFA Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFA Gevaert NV and Groep Brussel 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 Groep Brussel Lambert are associated (or correlated) with AGFA Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFA Gevaert NV has no effect on the direction of Groep Brussel i.e., Groep Brussel and AGFA Gevaert go up and down completely randomly.

Pair Corralation between Groep Brussel and AGFA Gevaert

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to generate 0.21 times more return on investment than AGFA Gevaert. However, Groep Brussel Lambert is 4.84 times less risky than AGFA Gevaert. It trades about -0.05 of its potential returns per unit of risk. AGFA Gevaert NV is currently generating about -0.04 per unit of risk. If you would invest  6,650  in Groep Brussel Lambert on October 9, 2024 and sell it today you would lose (35.00) from holding Groep Brussel Lambert or give up 0.53% of portfolio value over 90 days.

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

Groep Brussel Lambert  vs.  AGFA Gevaert NV

Groep Brussel Lambert

Risk-Adjusted Performance

0 of 100

Very Weak

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

AGFA Gevaert NV

Risk-Adjusted Performance

0 of 100

Very 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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Groep Brussel and AGFA Gevaert

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

The idea behind Groep Brussel Lambert and AGFA Gevaert 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.