Correlation Between Proximus and Ageas SANV

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

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

Diversification Opportunities for Proximus and Ageas SANV

0.94

Correlation Coefficient

Proximus  Ageas SANV

Almost no diversification

The 3 months correlation between Proximus and Ageas is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV and ageas SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ageas SANV and Proximus 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 Proximus NV are associated (or correlated) with Ageas SANV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ageas SANV has no effect on the direction of Proximus i.e., Proximus and Ageas SANV go up and down completely randomly.

Pair Corralation between Proximus and Ageas SANV

Assuming the 90 days trading horizon Proximus NV is expected to generate 2.0 times more return on investment than Ageas SANV. However, Proximus is 2.0 times more volatile than ageas SANV. It trades about 0.27 of its potential returns per unit of risk. ageas SANV is currently generating about 0.34 per unit of risk. If you would invest  499.00  in Proximus NV on December 28, 2024 and sell it today you would earn a total of  172.00  from holding Proximus NV or generate 34.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Proximus NV  vs.  ageas SANV

Proximus NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Proximus NV are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Proximus reported solid returns over the last few months and may actually be approaching a breakup point.

ageas SANV

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ageas SANV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Proximus and Ageas SANV

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

The idea behind Proximus NV and ageas SANV 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.