Correlation Between Galapagos and Tubize Fin
Can any of the company-specific risk be diversified away by investing in both Galapagos and Tubize Fin 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 Galapagos and Tubize Fin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galapagos NV and Tubize Fin, you can compare the effects of market volatilities on Galapagos and Tubize Fin 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 Galapagos with a short position of Tubize Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galapagos and Tubize Fin.
Diversification Opportunities for Galapagos and Tubize Fin
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Galapagos and Tubize is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Galapagos NV and Tubize Fin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubize Fin and Galapagos 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 Galapagos NV are associated (or correlated) with Tubize Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubize Fin has no effect on the direction of Galapagos i.e., Galapagos and Tubize Fin go up and down completely randomly.
Pair Corralation between Galapagos and Tubize Fin
Assuming the 90 days trading horizon Galapagos is expected to generate 6.58 times less return on investment than Tubize Fin. In addition to that, Galapagos is 1.09 times more volatile than Tubize Fin. It trades about 0.02 of its total potential returns per unit of risk. Tubize Fin is currently generating about 0.14 per unit of volatility. If you would invest 9,850 in Tubize Fin on September 1, 2024 and sell it today you would earn a total of 3,930 from holding Tubize Fin or generate 39.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galapagos NV vs. Tubize Fin
Performance |
| Timeline |
| Galapagos NV |
| Tubize Fin |
Galapagos and Tubize Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galapagos and Tubize Fin
The main advantage of trading using opposite Galapagos and Tubize Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galapagos position performs unexpectedly, Tubize Fin 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 Tubize Fin will offset losses from the drop in Tubize Fin's long position.| Galapagos vs. Argen X | Galapagos vs. Pharming Group NV | Galapagos vs. Barco NV | Galapagos vs. Biocartis Group NV |
| Tubize Fin vs. Groep Brussel Lambert | Tubize Fin vs. Ackermans Van Haaren | Tubize Fin vs. Tessenderlo | Tubize Fin vs. Sofina Socit Anonyme |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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