Correlation Between AGFA Gevaert and Barco NV

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

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

Diversification Opportunities for AGFA Gevaert and Barco NV

0.86

Correlation Coefficient

AGFA Gevaert  Barco NV

Very poor diversification

The 3 months correlation between AGFA and Barco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AGFA Gevaert NV and Barco NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barco NV and AGFA Gevaert 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 AGFA Gevaert NV are associated (or correlated) with Barco NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barco NV has no effect on the direction of AGFA Gevaert i.e., AGFA Gevaert and Barco NV go up and down completely randomly.

Pair Corralation between AGFA Gevaert and Barco NV

Assuming the 90 days trading horizon AGFA Gevaert NV is expected to under-perform the Barco NV. In addition to that, AGFA Gevaert is 2.15 times more volatile than Barco NV. It trades about -0.18 of its total potential returns per unit of risk. Barco NV is currently generating about -0.13 per unit of volatility. If you would invest  1,214  in Barco NV on September 19, 2024 and sell it today you would lose (175.00) from holding Barco NV or give up 14.42% of portfolio value over 90 days.

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

AGFA Gevaert NV  vs.  Barco NV

AGFA Gevaert NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGFA Gevaert NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Barco NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barco NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AGFA Gevaert and Barco NV

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

The idea behind AGFA Gevaert NV and Barco 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.