Correlation Between Koninklijke KPN and Fugro NV
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and Fugro NV 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 Fugro NV 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 Fugro NV, you can compare the effects of market volatilities on Koninklijke KPN and Fugro NV 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 Fugro NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Fugro NV.
Diversification Opportunities for Koninklijke KPN and Fugro NV
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Koninklijke and Fugro is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Fugro NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fugro NV 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 Fugro NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fugro NV has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Fugro NV go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Fugro NV
Assuming the 90 days trading horizon Koninklijke KPN NV is expected to under-perform the Fugro NV. But the stock apears to be less risky and, when comparing its historical volatility, Koninklijke KPN NV is 1.83 times less risky than Fugro NV. The stock trades about -0.06 of its potential returns per unit of risk. The Fugro NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,665 in Fugro NV on September 12, 2024 and sell it today you would earn a total of 26.00 from holding Fugro NV or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Fugro NV
Performance |
| Timeline |
| Koninklijke KPN NV |
| Fugro NV |
Koninklijke KPN and Fugro NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Fugro NV
The main advantage of trading using opposite Koninklijke KPN and Fugro NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, Fugro NV 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 Fugro NV will offset losses from the drop in Fugro NV'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 |
| Fugro NV vs. SBM Offshore NV | Fugro NV vs. Koninklijke BAM Groep | Fugro NV vs. PostNL NV | Fugro NV 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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