Correlation Between Groep Brussel and Brederode

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

Diversification Opportunities for Groep Brussel and Brederode

0.63

Correlation Coefficient

Groep Brussel  Brederode

Poor diversification

The 3 months correlation between Groep and Brederode is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and Brederode SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brederode SA 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 Brederode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brederode SA has no effect on the direction of Groep Brussel i.e., Groep Brussel and Brederode go up and down completely randomly.

Pair Corralation between Groep Brussel and Brederode

Assuming the 90 days trading horizon Groep Brussel is expected to generate 2.03 times less return on investment than Brederode. But when comparing it to its historical volatility, Groep Brussel Lambert is 1.28 times less risky than Brederode. It trades about 0.1 of its potential returns per unit of risk. Brederode SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,500  in Brederode SA on December 2, 2024 and sell it today you would earn a total of  1,020  from holding Brederode SA or generate 9.71% return on investment over 90 days.

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

Groep Brussel Lambert  vs.  Brederode SA

Groep Brussel Lambert

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groep Brussel Lambert are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Brederode SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brederode SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Brederode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Groep Brussel and Brederode

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

The idea behind Groep Brussel Lambert and Brederode SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.