Correlation Between Koninklijke Heijmans and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Koninklijke Heijmans and Flow Traders 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 Heijmans and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Heijmans NV and Flow Traders BV, you can compare the effects of market volatilities on Koninklijke Heijmans and Flow Traders 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 Heijmans with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Heijmans and Flow Traders.
Diversification Opportunities for Koninklijke Heijmans and Flow Traders
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Koninklijke and Flow is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Heijmans NV and Flow Traders BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders BV and Koninklijke Heijmans 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 Heijmans NV are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders BV has no effect on the direction of Koninklijke Heijmans i.e., Koninklijke Heijmans and Flow Traders go up and down completely randomly.
Pair Corralation between Koninklijke Heijmans and Flow Traders
Assuming the 90 days trading horizon Koninklijke Heijmans is expected to generate 1.46 times less return on investment than Flow Traders. In addition to that, Koninklijke Heijmans is 1.9 times more volatile than Flow Traders BV. It trades about 0.07 of its total potential returns per unit of risk. Flow Traders BV is currently generating about 0.19 per unit of volatility. If you would invest 1,865 in Flow Traders BV on August 28, 2024 and sell it today you would earn a total of 237.00 from holding Flow Traders BV or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Heijmans NV vs. Flow Traders BV
Performance |
| Timeline |
| Koninklijke Heijmans |
| Flow Traders BV |
Koninklijke Heijmans and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Heijmans and Flow Traders
The main advantage of trading using opposite Koninklijke Heijmans and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Heijmans position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Koninklijke Heijmans vs. Fugro NV | Koninklijke Heijmans vs. SBM Offshore NV | Koninklijke Heijmans vs. Aegon NV | Koninklijke Heijmans vs. PostNL NV |
| Flow Traders vs. NN Group NV | Flow Traders vs. Koninklijke Ahold Delhaize | Flow Traders vs. BE Semiconductor Industries | Flow Traders vs. Aegon 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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