Correlation Between Koninklijke KPN and Randstad
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and Randstad 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 Randstad 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 Randstad NV, you can compare the effects of market volatilities on Koninklijke KPN and Randstad 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 Randstad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Randstad.
Diversification Opportunities for Koninklijke KPN and Randstad
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Koninklijke and Randstad is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Randstad NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad 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 Randstad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad NV has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Randstad go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Randstad
Assuming the 90 days trading horizon Koninklijke KPN NV is expected to generate 0.39 times more return on investment than Randstad. However, Koninklijke KPN NV is 2.55 times less risky than Randstad. It trades about 0.22 of its potential returns per unit of risk. Randstad NV is currently generating about 0.01 per unit of risk. If you would invest 351.00 in Koninklijke KPN NV on December 8, 2024 and sell it today you would earn a total of 19.00 from holding Koninklijke KPN NV or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Randstad NV
Performance |
| Timeline |
| Koninklijke KPN NV |
| Randstad NV |
Koninklijke KPN and Randstad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Randstad
The main advantage of trading using opposite Koninklijke KPN and Randstad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, Randstad 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 Randstad will offset losses from the drop in Randstad's long position.| Koninklijke KPN vs. Aegon NV | ||
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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