Correlation Between Tessenderlo and AGFA Gevaert
Can any of the company-specific risk be diversified away by investing in both Tessenderlo and AGFA Gevaert 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 Tessenderlo and AGFA Gevaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tessenderlo and AGFA Gevaert NV, you can compare the effects of market volatilities on Tessenderlo and AGFA Gevaert 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 Tessenderlo with a short position of AGFA Gevaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tessenderlo and AGFA Gevaert.
Diversification Opportunities for Tessenderlo and AGFA Gevaert
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tessenderlo and AGFA is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tessenderlo and AGFA Gevaert NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFA Gevaert NV and Tessenderlo 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 Tessenderlo are associated (or correlated) with AGFA Gevaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFA Gevaert NV has no effect on the direction of Tessenderlo i.e., Tessenderlo and AGFA Gevaert go up and down completely randomly.
Pair Corralation between Tessenderlo and AGFA Gevaert
Assuming the 90 days trading horizon Tessenderlo is expected to generate 0.46 times more return on investment than AGFA Gevaert. However, Tessenderlo is 2.2 times less risky than AGFA Gevaert. It trades about -0.05 of its potential returns per unit of risk. AGFA Gevaert NV is currently generating about -0.09 per unit of risk. If you would invest 3,155 in Tessenderlo on August 26, 2024 and sell it today you would lose (985.00) from holding Tessenderlo or give up 31.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tessenderlo vs. AGFA Gevaert NV
Performance |
| Timeline |
| Tessenderlo |
| AGFA Gevaert NV |
Tessenderlo and AGFA Gevaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tessenderlo and AGFA Gevaert
The main advantage of trading using opposite Tessenderlo and AGFA Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tessenderlo position performs unexpectedly, AGFA Gevaert 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 AGFA Gevaert will offset losses from the drop in AGFA Gevaert's long position.| Tessenderlo vs. Ackermans Van Haaren | Tessenderlo vs. NV Bekaert SA | Tessenderlo vs. Groep Brussel Lambert | Tessenderlo vs. Tubize Fin |
| AGFA Gevaert vs. NV Bekaert SA | AGFA Gevaert vs. Barco NV | AGFA Gevaert vs. EVS Broadcast Equipment | AGFA Gevaert vs. Nyrstar NV |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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