Correlation Between Koninklijke BAM and Koninklijke Heijmans
Can any of the company-specific risk be diversified away by investing in both Koninklijke BAM and Koninklijke Heijmans 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 Koninklijke BAM and Koninklijke Heijmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke BAM Groep and Koninklijke Heijmans NV, you can compare the effects of market volatilities on Koninklijke BAM and Koninklijke Heijmans 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 Koninklijke BAM with a short position of Koninklijke Heijmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke BAM and Koninklijke Heijmans.
Diversification Opportunities for Koninklijke BAM and Koninklijke Heijmans
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Koninklijke and Koninklijke is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke BAM Groep and Koninklijke Heijmans NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Heijmans and Koninklijke BAM 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 Koninklijke BAM Groep are associated (or correlated) with Koninklijke Heijmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Heijmans has no effect on the direction of Koninklijke BAM i.e., Koninklijke BAM and Koninklijke Heijmans go up and down completely randomly.
Pair Corralation between Koninklijke BAM and Koninklijke Heijmans
Assuming the 90 days trading horizon Koninklijke BAM is expected to generate 1.41 times less return on investment than Koninklijke Heijmans. But when comparing it to its historical volatility, Koninklijke BAM Groep is 1.01 times less risky than Koninklijke Heijmans. It trades about 0.16 of its potential returns per unit of risk. Koninklijke Heijmans NV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,344 in Koninklijke Heijmans NV on February 18, 2024 and sell it today you would earn a total of 528.00 from holding Koninklijke Heijmans NV or generate 39.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Koninklijke BAM Groep vs. Koninklijke Heijmans NV
Performance |
Timeline |
Koninklijke BAM Groep |
Koninklijke Heijmans |
Koninklijke BAM and Koninklijke Heijmans Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Koninklijke BAM and Koninklijke Heijmans
The main advantage of trading using opposite Koninklijke BAM and Koninklijke Heijmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke BAM position performs unexpectedly, Koninklijke Heijmans 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 Koninklijke Heijmans will offset losses from the drop in Koninklijke Heijmans' long position.Koninklijke BAM vs. PostNL NV | Koninklijke BAM vs. ForFarmers NV | Koninklijke BAM vs. Flow Traders BV | Koninklijke BAM vs. ASR Nederland NV |
Koninklijke Heijmans vs. PostNL NV | Koninklijke Heijmans vs. ForFarmers NV | Koninklijke Heijmans vs. Flow Traders BV | Koninklijke Heijmans vs. ASR Nederland NV |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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