Correlation Between Solvay SA and Ageas SANV

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

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

Diversification Opportunities for Solvay SA and Ageas SANV

0.87

Correlation Coefficient

Solvay SA  Ageas SANV

Very poor diversification

The 3 months correlation between Solvay and Ageas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and ageas SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ageas SANV and Solvay SA 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 Solvay SA 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 Solvay SA i.e., Solvay SA and Ageas SANV go up and down completely randomly.

Pair Corralation between Solvay SA and Ageas SANV

Assuming the 90 days trading horizon Solvay SA is expected to generate 1.5 times less return on investment than Ageas SANV. In addition to that, Solvay SA is 2.33 times more volatile than ageas SANV. It trades about 0.09 of its total potential returns per unit of risk. ageas SANV is currently generating about 0.32 per unit of volatility. If you would invest  4,636  in ageas SANV on December 30, 2024 and sell it today you would earn a total of  939.00  from holding ageas SANV or generate 20.25% return on investment over 90 days.

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

Solvay SA  vs.  ageas SANV

Solvay SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solvay SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Solvay SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ageas SANV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 25 (%) 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 Solvay SA and Ageas SANV

The main advantage of trading using opposite Solvay SA and Ageas SANV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA 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 Solvay SA 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.