Correlation Between Galapagos and Koninklijke BAM
Can any of the company-specific risk be diversified away by investing in both Galapagos and Koninklijke BAM 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 Galapagos and Koninklijke BAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galapagos NV and Koninklijke BAM Groep, you can compare the effects of market volatilities on Galapagos and Koninklijke BAM 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 Galapagos with a short position of Koninklijke BAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galapagos and Koninklijke BAM.
Diversification Opportunities for Galapagos and Koninklijke BAM
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Galapagos and Koninklijke is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Galapagos NV and Koninklijke BAM Groep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke BAM Groep and Galapagos 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 Galapagos NV are associated (or correlated) with Koninklijke BAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke BAM Groep has no effect on the direction of Galapagos i.e., Galapagos and Koninklijke BAM go up and down completely randomly.
Pair Corralation between Galapagos and Koninklijke BAM
Assuming the 90 days trading horizon Galapagos is expected to generate 10.0 times less return on investment than Koninklijke BAM. In addition to that, Galapagos is 1.25 times more volatile than Koninklijke BAM Groep. It trades about 0.0 of its total potential returns per unit of risk. Koninklijke BAM Groep is currently generating about 0.05 per unit of volatility. If you would invest 377.00 in Koninklijke BAM Groep on August 30, 2024 and sell it today you would earn a total of 17.00 from holding Koninklijke BAM Groep or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galapagos NV vs. Koninklijke BAM Groep
Performance |
| Timeline |
| Galapagos NV |
| Koninklijke BAM Groep |
Galapagos and Koninklijke BAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galapagos and Koninklijke BAM
The main advantage of trading using opposite Galapagos and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galapagos position performs unexpectedly, Koninklijke BAM 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 BAM will offset losses from the drop in Koninklijke BAM's long position.| Galapagos vs. Argen X | Galapagos vs. Pharming Group NV | Galapagos vs. Barco NV | Galapagos vs. Biocartis Group NV |
| Koninklijke BAM vs. Fugro NV | Koninklijke BAM vs. SBM Offshore NV | Koninklijke BAM vs. Aegon NV | Koninklijke BAM vs. PostNL 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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