Correlation Between ING Groep and BS Group

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

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

Diversification Opportunities for ING Groep and BS Group

-0.78

Correlation Coefficient

ING Groep  BS Group

Pay attention - limited upside

The 3 months correlation between ING and BSGR is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ING Groep NV and BS Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BS Group SA and ING Groep 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 ING Groep NV are associated (or correlated) with BS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BS Group SA has no effect on the direction of ING Groep i.e., ING Groep and BS Group go up and down completely randomly.

Pair Corralation between ING Groep and BS Group

Assuming the 90 days trading horizon ING Groep NV is expected to generate 1.16 times more return on investment than BS Group. However, ING Groep is 1.16 times more volatile than BS Group SA. It trades about 0.24 of its potential returns per unit of risk. BS Group SA is currently generating about -0.04 per unit of risk. If you would invest  1,488  in ING Groep NV on December 29, 2024 and sell it today you would earn a total of  342.00  from holding ING Groep NV or generate 22.98% return on investment over 90 days.

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

ING Groep NV  vs.  BS Group SA

ING Groep NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ING Groep NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ING Groep unveiled solid returns over the last few months and may actually be approaching a breakup point.

BS Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BS Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BS Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ING Groep and BS Group

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

The idea behind ING Groep NV and BS Group SA 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.