Correlation Between Amsterdam Commodities and Basic Fit
Can any of the company-specific risk be diversified away by investing in both Amsterdam Commodities and Basic Fit 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 Amsterdam Commodities and Basic Fit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amsterdam Commodities NV and Basic Fit NV, you can compare the effects of market volatilities on Amsterdam Commodities and Basic Fit 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 Amsterdam Commodities with a short position of Basic Fit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amsterdam Commodities and Basic Fit.
Diversification Opportunities for Amsterdam Commodities and Basic Fit
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amsterdam and Basic is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Amsterdam Commodities NV and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit NV and Amsterdam Commodities 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 Amsterdam Commodities NV are associated (or correlated) with Basic Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of Amsterdam Commodities i.e., Amsterdam Commodities and Basic Fit go up and down completely randomly.
Pair Corralation between Amsterdam Commodities and Basic Fit
Assuming the 90 days trading horizon Amsterdam Commodities NV is expected to generate 0.72 times more return on investment than Basic Fit. However, Amsterdam Commodities NV is 1.38 times less risky than Basic Fit. It trades about -0.11 of its potential returns per unit of risk. Basic Fit NV is currently generating about -0.21 per unit of risk. If you would invest 1,776 in Amsterdam Commodities NV on August 29, 2024 and sell it today you would lose (48.00) from holding Amsterdam Commodities NV or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amsterdam Commodities NV vs. Basic Fit NV
Performance |
| Timeline |
| Amsterdam Commodities |
| Basic Fit NV |
Amsterdam Commodities and Basic Fit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amsterdam Commodities and Basic Fit
The main advantage of trading using opposite Amsterdam Commodities and Basic Fit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amsterdam Commodities position performs unexpectedly, Basic Fit 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 Basic Fit will offset losses from the drop in Basic Fit's long position.| Amsterdam Commodities vs. Flow Traders BV | Amsterdam Commodities vs. Aalberts Industries NV | Amsterdam Commodities vs. ForFarmers NV | Amsterdam Commodities vs. TKH Group NV |
| Basic Fit vs. Alfen Beheer BV | Basic Fit vs. Just Eat Takeaway | Basic Fit vs. Kinepolis Group NV | Basic Fit vs. Galapagos 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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