Correlation Between GIMV NV and Solvac SA

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

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

Diversification Opportunities for GIMV NV and Solvac SA

-0.44

Correlation Coefficient

GIMV NV  Solvac SA

Very good diversification

The 3 months correlation between GIMV and Solvac is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GIMV NV and Solvac SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvac SA and GIMV NV 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 GIMV NV are associated (or correlated) with Solvac SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvac SA has no effect on the direction of GIMV NV i.e., GIMV NV and Solvac SA go up and down completely randomly.

Pair Corralation between GIMV NV and Solvac SA

Assuming the 90 days trading horizon GIMV NV is expected to generate 1.4 times more return on investment than Solvac SA. However, GIMV NV is 1.4 times more volatile than Solvac SA. It trades about 0.17 of its potential returns per unit of risk. Solvac SA is currently generating about 0.17 per unit of risk. If you would invest  3,760  in GIMV NV on September 13, 2024 and sell it today you would earn a total of  235.00  from holding GIMV NV or generate 6.25% return on investment over 90 days.

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

GIMV NV  vs.  Solvac SA

GIMV NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIMV NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, GIMV NV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Solvac SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solvac SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Solvac SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GIMV NV and Solvac SA

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

The idea behind GIMV NV and Solvac SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.