Correlation Between Materialise and GEA GROUP

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

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

Diversification Opportunities for Materialise and GEA GROUP

0.61

Correlation Coefficient

Materialise  GEA GROUP

Poor diversification

The 3 months correlation between Materialise and GEA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP and Materialise 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 Materialise NV are associated (or correlated) with GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of Materialise i.e., Materialise and GEA GROUP go up and down completely randomly.

Pair Corralation between Materialise and GEA GROUP

Assuming the 90 days trading horizon Materialise NV is expected to generate 4.95 times more return on investment than GEA GROUP. However, Materialise is 4.95 times more volatile than GEA GROUP. It trades about 0.15 of its potential returns per unit of risk. GEA GROUP is currently generating about 0.17 per unit of risk. If you would invest  486.00  in Materialise NV on September 30, 2024 and sell it today you would earn a total of  209.00  from holding Materialise NV or generate 43.0% return on investment over 90 days.

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

Materialise NV  vs.  GEA GROUP

Materialise NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

GEA GROUP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEA GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GEA GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Materialise and GEA GROUP

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

The idea behind Materialise NV and GEA GROUP 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.