Correlation Between Aalberts Industries and TKH Group
Can any of the company-specific risk be diversified away by investing in both Aalberts Industries and TKH Group 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 Aalberts Industries and TKH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aalberts Industries NV and TKH Group NV, you can compare the effects of market volatilities on Aalberts Industries and TKH Group 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 Aalberts Industries with a short position of TKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aalberts Industries and TKH Group.
Diversification Opportunities for Aalberts Industries and TKH Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aalberts and TKH is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aalberts Industries NV and TKH Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKH Group NV and Aalberts Industries 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 Aalberts Industries NV are associated (or correlated) with TKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKH Group NV has no effect on the direction of Aalberts Industries i.e., Aalberts Industries and TKH Group go up and down completely randomly.
Pair Corralation between Aalberts Industries and TKH Group
Assuming the 90 days trading horizon Aalberts Industries is expected to generate 2.7 times less return on investment than TKH Group. In addition to that, Aalberts Industries is 1.46 times more volatile than TKH Group NV. It trades about 0.08 of its total potential returns per unit of risk. TKH Group NV is currently generating about 0.3 per unit of volatility. If you would invest 3,318 in TKH Group NV on October 23, 2024 and sell it today you would earn a total of 188.00 from holding TKH Group NV or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aalberts Industries NV vs. TKH Group NV
Performance |
| Timeline |
| Aalberts Industries |
| TKH Group NV |
Aalberts Industries and TKH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aalberts Industries and TKH Group
The main advantage of trading using opposite Aalberts Industries and TKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aalberts Industries position performs unexpectedly, TKH Group 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 TKH Group will offset losses from the drop in TKH Group's long position.| Aalberts Industries vs. TKH Group NV | Aalberts Industries vs. Koninklijke Vopak NV | Aalberts Industries vs. Randstad NV | Aalberts Industries vs. SBM Offshore NV |
| TKH Group vs. Aalberts Industries NV | TKH Group vs. BE Semiconductor Industries | TKH Group vs. AMG Advanced Metallurgical | TKH Group vs. Koninklijke Vopak 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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