Correlation Between Groep Brussel and GIMV NV

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

Diversification Opportunities for Groep Brussel and GIMV NV

0.68

Correlation Coefficient

Groep Brussel  GIMV NV

Poor diversification

The 3 months correlation between Groep and GIMV is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV 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 GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of Groep Brussel i.e., Groep Brussel and GIMV NV go up and down completely randomly.

Pair Corralation between Groep Brussel and GIMV NV

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to under-perform the GIMV NV. But the stock apears to be less risky and, when comparing its historical volatility, Groep Brussel Lambert is 1.4 times less risky than GIMV NV. The stock trades about -0.09 of its potential returns per unit of risk. The GIMV NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,970  in GIMV NV on August 31, 2024 and sell it today you would earn a total of  30.00  from holding GIMV NV or generate 0.76% 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.  GIMV 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.

GIMV NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GIMV NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, GIMV NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Groep Brussel and GIMV NV

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

The idea behind Groep Brussel Lambert and GIMV 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.