Correlation Between Koninklijke KPN and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and SBM Offshore 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 SBM Offshore 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 SBM Offshore NV, you can compare the effects of market volatilities on Koninklijke KPN and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and SBM Offshore.
Diversification Opportunities for Koninklijke KPN and SBM Offshore
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Koninklijke and SBM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and SBM Offshore go up and down completely randomly.
Pair Corralation between Koninklijke KPN and SBM Offshore
Assuming the 90 days trading horizon Koninklijke KPN NV is expected to generate about the same return on investment as SBM Offshore NV. But, Koninklijke KPN NV is 2.08 times less risky than SBM Offshore. It trades about 0.09 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.04 per unit of risk. If you would invest 1,305 in SBM Offshore NV on September 5, 2024 and sell it today you would earn a total of 405.00 from holding SBM Offshore NV or generate 31.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. SBM Offshore NV
Performance |
| Timeline |
| Koninklijke KPN NV |
| SBM Offshore NV |
Koninklijke KPN and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and SBM Offshore
The main advantage of trading using opposite Koninklijke KPN and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Koninklijke KPN vs. Adyen NV | Koninklijke KPN vs. ASML Holding NV | Koninklijke KPN vs. ASM International NV | Koninklijke KPN vs. IMCD NV |
| SBM Offshore vs. Fugro NV | SBM Offshore vs. Koninklijke Vopak NV | SBM Offshore vs. Randstad NV | SBM Offshore vs. Aalberts Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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