Correlation Between Ion Beam and AGFA Gevaert

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

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

Diversification Opportunities for Ion Beam and AGFA Gevaert

0.29

Correlation Coefficient

Ion Beam  AGFA Gevaert

Modest diversification

The 3 months correlation between Ion and AGFA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications 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 Ion Beam 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 Ion Beam Applications 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 Ion Beam i.e., Ion Beam and AGFA Gevaert go up and down completely randomly.

Pair Corralation between Ion Beam and AGFA Gevaert

Assuming the 90 days trading horizon Ion Beam Applications is expected to generate 0.67 times more return on investment than AGFA Gevaert. However, Ion Beam Applications is 1.5 times less risky than AGFA Gevaert. It trades about -0.03 of its potential returns per unit of risk. AGFA Gevaert NV is currently generating about -0.18 per unit of risk. If you would invest  1,370  in Ion Beam Applications on September 19, 2024 and sell it today you would lose (78.00) from holding Ion Beam Applications or give up 5.69% of portfolio value over 90 days.

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

Ion Beam Applications  vs.  AGFA Gevaert NV

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Ion Beam and AGFA Gevaert

The main advantage of trading using opposite Ion Beam and AGFA Gevaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ion Beam 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.

The idea behind Ion Beam Applications and AGFA Gevaert 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.