Correlation Between Kendrion and ForFarmers
Can any of the company-specific risk be diversified away by investing in both Kendrion and ForFarmers 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 ForFarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kendrion NV and ForFarmers NV, you can compare the effects of market volatilities on Kendrion and ForFarmers 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 ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kendrion and ForFarmers.
Diversification Opportunities for Kendrion and ForFarmers
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kendrion and ForFarmers is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kendrion NV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV 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 ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of Kendrion i.e., Kendrion and ForFarmers go up and down completely randomly.
Pair Corralation between Kendrion and ForFarmers
Assuming the 90 days trading horizon Kendrion NV is expected to under-perform the ForFarmers. In addition to that, Kendrion is 1.11 times more volatile than ForFarmers NV. It trades about -0.02 of its total potential returns per unit of risk. ForFarmers NV is currently generating about 0.05 per unit of volatility. If you would invest 249.00 in ForFarmers NV on September 12, 2024 and sell it today you would earn a total of 91.00 from holding ForFarmers NV or generate 36.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kendrion NV vs. ForFarmers NV
Performance |
| Timeline |
| Kendrion NV |
| ForFarmers NV |
Kendrion and ForFarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kendrion and ForFarmers
The main advantage of trading using opposite Kendrion and ForFarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kendrion position performs unexpectedly, ForFarmers 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 ForFarmers will offset losses from the drop in ForFarmers' long position.| Kendrion vs. TKH Group NV | Kendrion vs. NV Nederlandsche Apparatenfabriek | Kendrion vs. Brunel International NV | Kendrion vs. Aalberts Industries NV |
| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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