Correlation Between Sipef NV and Bpost NV

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

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

Diversification Opportunities for Sipef NV and Bpost NV

0.3

Correlation Coefficient

Sipef NV  Bpost NV

Weak diversification

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

Pair Corralation between Sipef NV and Bpost NV

Assuming the 90 days trading horizon Sipef NV is expected to generate 0.47 times more return on investment than Bpost NV. However, Sipef NV is 2.12 times less risky than Bpost NV. It trades about 0.2 of its potential returns per unit of risk. Bpost NV is currently generating about -0.01 per unit of risk. If you would invest  5,070  in Sipef NV on February 20, 2024 and sell it today you would earn a total of  630.00  from holding Sipef NV or generate 12.43% return on investment over 90 days.

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

Sipef NV  vs.  Bpost NV

Sipef NV

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sipef NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sipef NV may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Bpost NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bpost NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bpost NV is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sipef NV and Bpost NV

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

The idea behind Sipef NV and Bpost 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.