Correlation Between Proximus and Sipef NV

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

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

Diversification Opportunities for Proximus and Sipef NV

0.93

Correlation Coefficient

Proximus  Sipef NV

Almost no diversification

The 3 months correlation between Proximus and Sipef is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Proximus NV and Sipef NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sipef NV 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 Sipef NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sipef NV has no effect on the direction of Proximus i.e., Proximus and Sipef NV go up and down completely randomly.

Pair Corralation between Proximus and Sipef NV

Assuming the 90 days trading horizon Proximus NV is expected to generate 2.32 times more return on investment than Sipef NV. However, Proximus is 2.32 times more volatile than Sipef NV. It trades about 0.28 of its potential returns per unit of risk. Sipef NV is currently generating about 0.15 per unit of risk. If you would invest  499.00  in Proximus NV on December 30, 2024 and sell it today you would earn a total of  185.00  from holding Proximus NV or generate 37.07% 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.  Sipef NV

Proximus NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Proximus NV are ranked lower than 22 (%) 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.

Sipef NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sipef NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sipef NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Proximus and Sipef NV

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

The idea behind Proximus NV and Sipef 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 Anywhere module to track or share privately all of your investments from the convenience of any device.