Correlation Between GIMV NV and Melexis NV

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

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

Diversification Opportunities for GIMV NV and Melexis NV

-0.1

Correlation Coefficient

GIMV NV  Melexis NV

Good diversification

The 3 months correlation between GIMV and Melexis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GIMV NV and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of GIMV NV i.e., GIMV NV and Melexis NV go up and down completely randomly.

Pair Corralation between GIMV NV and Melexis NV

Assuming the 90 days trading horizon GIMV NV is expected to generate 6.27 times less return on investment than Melexis NV. But when comparing it to its historical volatility, GIMV NV is 2.08 times less risky than Melexis NV. It trades about 0.01 of its potential returns per unit of risk. Melexis NV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,565  in Melexis NV on December 24, 2024 and sell it today you would earn a total of  145.00  from holding Melexis NV or generate 2.61% return on investment over 90 days.

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

GIMV NV  vs.  Melexis NV

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Melexis NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Melexis NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Melexis NV is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GIMV NV and Melexis NV

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

The idea behind GIMV NV and Melexis 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.