Correlation Between Groep Brussel and Socit De

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

Diversification Opportunities for Groep Brussel and Socit De

-0.26

Correlation Coefficient

Groep Brussel  Socit De

Very good diversification

The 3 months correlation between Groep and Socit is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and Socit de Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit de Services 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 Socit De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit de Services has no effect on the direction of Groep Brussel i.e., Groep Brussel and Socit De go up and down completely randomly.

Pair Corralation between Groep Brussel and Socit De

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to generate 0.6 times more return on investment than Socit De. However, Groep Brussel Lambert is 1.66 times less risky than Socit De. It trades about 0.28 of its potential returns per unit of risk. Socit de Services is currently generating about 0.01 per unit of risk. If you would invest  6,565  in Groep Brussel Lambert on December 5, 2024 and sell it today you would earn a total of  375.00  from holding Groep Brussel Lambert or generate 5.71% return on investment over 90 days.

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

Groep Brussel Lambert  vs.  Socit de Services

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 8 (%) 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.

Socit de Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Socit de Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Socit De 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 Socit De

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

The idea behind Groep Brussel Lambert and Socit de Services 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.