Correlation Between Koninklijke KPN and Sif Holding
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and Sif Holding 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 Sif Holding 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 Sif Holding NV, you can compare the effects of market volatilities on Koninklijke KPN and Sif Holding 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 Sif Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Sif Holding.
Diversification Opportunities for Koninklijke KPN and Sif Holding
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Koninklijke and Sif is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Sif Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sif Holding 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 Sif Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sif Holding NV has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Sif Holding go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Sif Holding
Assuming the 90 days trading horizon Koninklijke KPN NV is expected to generate 0.39 times more return on investment than Sif Holding. However, Koninklijke KPN NV is 2.57 times less risky than Sif Holding. It trades about 0.06 of its potential returns per unit of risk. Sif Holding NV is currently generating about 0.01 per unit of risk. If you would invest 294.00 in Koninklijke KPN NV on December 4, 2024 and sell it today you would earn a total of 74.00 from holding Koninklijke KPN NV or generate 25.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Sif Holding NV
Performance |
| Timeline |
| Koninklijke KPN NV |
| Sif Holding NV |
Koninklijke KPN and Sif Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Sif Holding
The main advantage of trading using opposite Koninklijke KPN and Sif Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, Sif Holding 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 Sif Holding will offset losses from the drop in Sif Holding'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 |
| Sif Holding vs. Kendrion NV | Sif Holding vs. NV Nederlandsche Apparatenfabriek | Sif Holding vs. Brunel International NV | Sif Holding vs. TKH Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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