Correlation Between ASR Nederland and Kendrion

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

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

Diversification Opportunities for ASR Nederland and Kendrion

0.58

Correlation Coefficient

ASR Nederland  Kendrion

Very weak diversification

The 3 months correlation between ASR and Kendrion is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ASR Nederland NV and Kendrion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kendrion NV and ASR Nederland 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 ASR Nederland NV are associated (or correlated) with Kendrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kendrion NV has no effect on the direction of ASR Nederland i.e., ASR Nederland and Kendrion go up and down completely randomly.

Pair Corralation between ASR Nederland and Kendrion

Assuming the 90 days trading horizon ASR Nederland NV is expected to generate 0.53 times more return on investment than Kendrion. However, ASR Nederland NV is 1.89 times less risky than Kendrion. It trades about 0.25 of its potential returns per unit of risk. Kendrion NV is currently generating about -0.01 per unit of risk. If you would invest  4,388  in ASR Nederland NV on February 23, 2024 and sell it today you would earn a total of  454.00  from holding ASR Nederland NV or generate 10.35% return on investment over 90 days.

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

ASR Nederland NV  vs.  Kendrion NV

ASR Nederland NV

Risk-Adjusted Performance

15 of 100

Good

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

Kendrion NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kendrion NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kendrion may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with ASR Nederland and Kendrion

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

The idea behind ASR Nederland NV and Kendrion 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.