Correlation Between Kinepolis Group and Galapagos

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

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

Diversification Opportunities for Kinepolis Group and Galapagos

0.46

Correlation Coefficient

Kinepolis Group  Galapagos

Very weak diversification

The 3 months correlation between Kinepolis and Galapagos is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kinepolis Group NV and Galapagos NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galapagos NV and Kinepolis Group 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 Kinepolis Group NV 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 Kinepolis Group i.e., Kinepolis Group and Galapagos go up and down completely randomly.

Pair Corralation between Kinepolis Group and Galapagos

Assuming the 90 days trading horizon Kinepolis Group NV is expected to under-perform the Galapagos. But the stock apears to be less risky and, when comparing its historical volatility, Kinepolis Group NV is 1.44 times less risky than Galapagos. The stock trades about 0.0 of its potential returns per unit of risk. The Galapagos NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,572  in Galapagos NV on September 25, 2024 and sell it today you would earn a total of  4.00  from holding Galapagos NV or generate 0.16% return on investment over 90 days.

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

Kinepolis Group NV  vs.  Galapagos NV

Kinepolis Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Kinepolis Group and Galapagos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinepolis Group 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 Kinepolis Group NV 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.