Correlation Between Melexis NV and Proximus

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

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

Diversification Opportunities for Melexis NV and Proximus

-0.08

Correlation Coefficient

Melexis NV  Proximus

Good diversification

The 3 months correlation between Melexis and Proximus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Proximus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximus NV and Melexis 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 Melexis NV are associated (or correlated) with Proximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximus NV has no effect on the direction of Melexis NV i.e., Melexis NV and Proximus go up and down completely randomly.

Pair Corralation between Melexis NV and Proximus

Assuming the 90 days trading horizon Melexis NV is expected to generate 1.45 times less return on investment than Proximus. In addition to that, Melexis NV is 1.13 times more volatile than Proximus NV. It trades about 0.04 of its total potential returns per unit of risk. Proximus NV is currently generating about 0.06 per unit of volatility. If you would invest  561.00  in Proximus NV on December 3, 2024 and sell it today you would earn a total of  40.00  from holding Proximus NV or generate 7.13% return on investment over 90 days.

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

Melexis NV  vs.  Proximus NV

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

Proximus NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Proximus NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Proximus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Melexis NV and Proximus

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

The idea behind Melexis NV and Proximus 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.