Correlation Between Kendrion and Aalberts Industries
Can any of the company-specific risk be diversified away by investing in both Kendrion 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 Kendrion and Aalberts Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kendrion NV and Aalberts Industries NV, you can compare the effects of market volatilities on Kendrion 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 Kendrion with a short position of Aalberts Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kendrion and Aalberts Industries.
Diversification Opportunities for Kendrion and Aalberts Industries
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kendrion and Aalberts is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kendrion NV and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries and Kendrion 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 Kendrion NV 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 Kendrion i.e., Kendrion and Aalberts Industries go up and down completely randomly.
Pair Corralation between Kendrion and Aalberts Industries
Assuming the 90 days trading horizon Kendrion NV is expected to under-perform the Aalberts Industries. But the stock apears to be less risky and, when comparing its historical volatility, Kendrion NV is 1.22 times less risky than Aalberts Industries. The stock trades about -0.07 of its potential returns per unit of risk. The Aalberts Industries NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,422 in Aalberts Industries NV on October 26, 2024 and sell it today you would lose (40.00) from holding Aalberts Industries NV or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kendrion NV vs. Aalberts Industries NV
Performance |
| Timeline |
| Kendrion NV |
| Aalberts Industries |
Kendrion and Aalberts Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kendrion and Aalberts Industries
The main advantage of trading using opposite Kendrion and Aalberts Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kendrion 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.| Kendrion vs. TKH Group NV | Kendrion vs. NV Nederlandsche Apparatenfabriek | Kendrion vs. Brunel International NV | Kendrion vs. Aalberts Industries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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