Correlation Between Groep Brussel and Warehouses

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

Diversification Opportunities for Groep Brussel and Warehouses

0.83

Correlation Coefficient

Groep Brussel  Warehouses

Very poor diversification

The 3 months correlation between Groep and Warehouses is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Groep Brussel Lambert and Warehouses de Pauw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warehouses de Pauw 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 Warehouses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warehouses de Pauw has no effect on the direction of Groep Brussel i.e., Groep Brussel and Warehouses go up and down completely randomly.

Pair Corralation between Groep Brussel and Warehouses

Assuming the 90 days trading horizon Groep Brussel Lambert is expected to generate 0.6 times more return on investment than Warehouses. However, Groep Brussel Lambert is 1.67 times less risky than Warehouses. It trades about -0.06 of its potential returns per unit of risk. Warehouses de Pauw is currently generating about -0.22 per unit of risk. If you would invest  6,850  in Groep Brussel Lambert on September 12, 2024 and sell it today you would lose (235.00) from holding Groep Brussel Lambert or give up 3.43% 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.  Warehouses de Pauw

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.

Warehouses de Pauw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses de Pauw 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 January 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 Warehouses

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

The idea behind Groep Brussel Lambert and Warehouses de Pauw 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.