Correlation Between Koninklijke BAM and Aalberts Industries
Can any of the company-specific risk be diversified away by investing in both Koninklijke BAM and Aalberts Industries 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 Aalberts Industries 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 Aalberts Industries NV, you can compare the effects of market volatilities on Koninklijke BAM and Aalberts Industries 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 Aalberts Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke BAM and Aalberts Industries.
Diversification Opportunities for Koninklijke BAM and Aalberts Industries
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Koninklijke and Aalberts is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke BAM Groep and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries 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 Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of Koninklijke BAM i.e., Koninklijke BAM and Aalberts Industries go up and down completely randomly.
Pair Corralation between Koninklijke BAM and Aalberts Industries
Assuming the 90 days trading horizon Koninklijke BAM is expected to generate 1.24 times less return on investment than Aalberts Industries. In addition to that, Koninklijke BAM is 1.13 times more volatile than Aalberts Industries NV. It trades about 0.05 of its total potential returns per unit of risk. Aalberts Industries NV is currently generating about 0.08 per unit of volatility. If you would invest 3,370 in Aalberts Industries NV on October 23, 2024 and sell it today you would earn a total of 64.00 from holding Aalberts Industries NV or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke BAM Groep vs. Aalberts Industries NV
Performance |
| Timeline |
| Koninklijke BAM Groep |
| Aalberts Industries |
Koninklijke BAM and Aalberts Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke BAM and Aalberts Industries
The main advantage of trading using opposite Koninklijke BAM and Aalberts Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke BAM position performs unexpectedly, Aalberts Industries 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 Aalberts Industries will offset losses from the drop in Aalberts Industries' long position.| Koninklijke BAM vs. Fugro NV | Koninklijke BAM vs. SBM Offshore NV | Koninklijke BAM vs. Aegon NV | Koninklijke BAM vs. PostNL NV |
| Aalberts Industries vs. TKH Group NV | Aalberts Industries vs. Koninklijke Vopak NV | Aalberts Industries vs. Randstad NV | Aalberts Industries vs. SBM Offshore 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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