Correlation Between Koninklijke KPN and Koninklijke BAM
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN 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 Koninklijke KPN and Koninklijke BAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke KPN NV and Koninklijke BAM Groep, you can compare the effects of market volatilities on Koninklijke KPN 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 Koninklijke KPN with a short position of Koninklijke BAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Koninklijke BAM.
Diversification Opportunities for Koninklijke KPN and Koninklijke BAM
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Koninklijke and Koninklijke is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN 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 Koninklijke KPN 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 KPN 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 Koninklijke KPN i.e., Koninklijke KPN and Koninklijke BAM go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Koninklijke BAM
Assuming the 90 days trading horizon Koninklijke KPN NV is expected to generate 0.64 times more return on investment than Koninklijke BAM. However, Koninklijke KPN NV is 1.57 times less risky than Koninklijke BAM. It trades about -0.06 of its potential returns per unit of risk. Koninklijke BAM Groep is currently generating about -0.09 per unit of risk. If you would invest 362.00 in Koninklijke KPN NV on September 12, 2024 and sell it today you would lose (5.00) from holding Koninklijke KPN NV or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Koninklijke BAM Groep
Performance |
| Timeline |
| Koninklijke KPN NV |
| Koninklijke BAM Groep |
Koninklijke KPN and Koninklijke BAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Koninklijke BAM
The main advantage of trading using opposite Koninklijke KPN and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN 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.| Koninklijke KPN vs. Aegon NV | Koninklijke KPN vs. Koninklijke Philips NV | Koninklijke KPN vs. Randstad NV | Koninklijke KPN vs. Akzo Nobel NV |
| Koninklijke BAM vs. PostNL NV | Koninklijke BAM vs. ForFarmers NV | Koninklijke BAM vs. Flow Traders BV | Koninklijke BAM vs. ASR Nederland 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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