Correlation Between BenevolentAI and Galapagos

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

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

Diversification Opportunities for BenevolentAI and Galapagos

0.3

Correlation Coefficient

BenevolentAI  Galapagos

Weak diversification

The 3 months correlation between BenevolentAI and Galapagos is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BenevolentAI SA and Galapagos NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galapagos NV and BenevolentAI 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 BenevolentAI SA are associated (or correlated) with Galapagos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galapagos NV has no effect on the direction of BenevolentAI i.e., BenevolentAI and Galapagos go up and down completely randomly.

Pair Corralation between BenevolentAI and Galapagos

Assuming the 90 days trading horizon BenevolentAI SA is expected to under-perform the Galapagos. In addition to that, BenevolentAI is 2.73 times more volatile than Galapagos NV. It trades about -0.11 of its total potential returns per unit of risk. Galapagos NV is currently generating about -0.03 per unit of volatility. If you would invest  2,692  in Galapagos NV on September 19, 2024 and sell it today you would lose (142.00) from holding Galapagos NV or give up 5.27% of portfolio value over 90 days.

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

BenevolentAI SA  vs.  Galapagos NV

BenevolentAI SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BenevolentAI SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Galapagos NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galapagos NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Galapagos is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BenevolentAI and Galapagos

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

The idea behind BenevolentAI SA and Galapagos 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 Anywhere module to track or share privately all of your investments from the convenience of any device.