Correlation Between Groep Brussel and Compagnie Des

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

Diversification Opportunities for Groep Brussel and Compagnie Des

-0.84

Correlation Coefficient

Groep Brussel  Compagnie Des

Pay attention - limited upside

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

Pair Corralation between Groep Brussel and Compagnie Des

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to under-perform the Compagnie Des. But the stock apears to be less risky and, when comparing its historical volatility, Groep Brussel Lambert is 1.28 times less risky than Compagnie Des. The stock trades about -0.07 of its potential returns per unit of risk. The Compagnie des Alpes is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,372  in Compagnie des Alpes on September 14, 2024 and sell it today you would earn a total of  128.00  from holding Compagnie des Alpes or generate 9.33% return on investment over 90 days.

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

Groep Brussel Lambert  vs.  Compagnie des Alpes

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.

Compagnie des Alpes

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie des Alpes are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie Des may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Groep Brussel and Compagnie Des

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

The idea behind Groep Brussel Lambert and Compagnie des Alpes 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.