Correlation Between NV Nederlandsche and IShares Asia

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

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

Diversification Opportunities for NV Nederlandsche and IShares Asia

0.28

Correlation Coefficient

NV Nederlandsche  IShares Asia

Modest diversification

The 3 months correlation between NEDAP and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NV Nederlandsche Apparatenfabr and iShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Pacific and NV Nederlandsche 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 NV Nederlandsche Apparatenfabriek are associated (or correlated) with IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Pacific has no effect on the direction of NV Nederlandsche i.e., NV Nederlandsche and IShares Asia go up and down completely randomly.

Pair Corralation between NV Nederlandsche and IShares Asia

Assuming the 90 days trading horizon NV Nederlandsche is expected to generate 1.54 times less return on investment than IShares Asia. In addition to that, NV Nederlandsche is 1.38 times more volatile than iShares Asia Pacific. It trades about 0.03 of its total potential returns per unit of risk. iShares Asia Pacific is currently generating about 0.07 per unit of volatility. If you would invest  1,650  in iShares Asia Pacific on June 23, 2024 and sell it today you would earn a total of  472.00  from holding iShares Asia Pacific or generate 28.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

NV Nederlandsche Apparatenfabr  vs.  iShares Asia Pacific

NV Nederlandsche App

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Nederlandsche Apparatenfabriek has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

iShares Asia Pacific

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Asia Pacific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NV Nederlandsche and IShares Asia

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

The idea behind NV Nederlandsche Apparatenfabriek and iShares Asia Pacific 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.