Correlation Between Ageas SANV and Melexis NV

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

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

Diversification Opportunities for Ageas SANV and Melexis NV

-0.59

Correlation Coefficient

Ageas SANV  Melexis NV

Excellent diversification

The 3 months correlation between Ageas and Melexis is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ageas SANV and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV and Ageas SANV 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 ageas SANV are associated (or correlated) with Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of Ageas SANV i.e., Ageas SANV and Melexis NV go up and down completely randomly.

Pair Corralation between Ageas SANV and Melexis NV

Assuming the 90 days trading horizon ageas SANV is expected to generate 0.25 times more return on investment than Melexis NV. However, ageas SANV is 3.96 times less risky than Melexis NV. It trades about 0.05 of its potential returns per unit of risk. Melexis NV is currently generating about -0.31 per unit of risk. If you would invest  4,830  in ageas SANV on August 26, 2024 and sell it today you would earn a total of  36.00  from holding ageas SANV or generate 0.75% return on investment over 90 days.

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

ageas SANV  vs.  Melexis NV

ageas SANV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ageas SANV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ageas SANV may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Melexis NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Melexis 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ageas SANV and Melexis NV

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

The idea behind ageas SANV and Melexis 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.