Correlation Between GIMV NV and Fluxys Belgium

Can any of the company-specific risk be diversified away by investing in both GIMV NV and Fluxys Belgium 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 GIMV NV and Fluxys Belgium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GIMV NV and Fluxys Belgium, you can compare the effects of market volatilities on GIMV NV and Fluxys Belgium 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 GIMV NV with a short position of Fluxys Belgium. Check out your portfolio center. Please also check ongoing floating volatility patterns of GIMV NV and Fluxys Belgium.

Diversification Opportunities for GIMV NV and Fluxys Belgium

-0.13

Correlation Coefficient

GIMV NV  Fluxys Belgium

Good diversification

The 3 months correlation between GIMV and Fluxys is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GIMV NV and Fluxys Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluxys Belgium and GIMV NV 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 GIMV NV are associated (or correlated) with Fluxys Belgium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluxys Belgium has no effect on the direction of GIMV NV i.e., GIMV NV and Fluxys Belgium go up and down completely randomly.

Pair Corralation between GIMV NV and Fluxys Belgium

Assuming the 90 days trading horizon GIMV NV is expected to generate 41.14 times less return on investment than Fluxys Belgium. But when comparing it to its historical volatility, GIMV NV is 1.66 times less risky than Fluxys Belgium. It trades about 0.01 of its potential returns per unit of risk. Fluxys Belgium is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,495  in Fluxys Belgium on December 29, 2024 and sell it today you would earn a total of  525.00  from holding Fluxys Belgium or generate 35.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

GIMV NV  vs.  Fluxys Belgium

GIMV NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days GIMV NV has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Fluxys Belgium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fluxys Belgium are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fluxys Belgium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GIMV NV and Fluxys Belgium

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

The idea behind GIMV NV and Fluxys Belgium 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.