Correlation Between Koninklijke KPN and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and Lion Biotechnologies 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 Lion Biotechnologies 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 Lion Biotechnologies, you can compare the effects of market volatilities on Koninklijke KPN and Lion Biotechnologies 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 Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Lion Biotechnologies.
Diversification Opportunities for Koninklijke KPN and Lion Biotechnologies
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Koninklijke and Lion is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies 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 Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Lion Biotechnologies
Assuming the 90 days horizon Koninklijke KPN NV is expected to generate 0.2 times more return on investment than Lion Biotechnologies. However, Koninklijke KPN NV is 4.98 times less risky than Lion Biotechnologies. It trades about 0.02 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.11 per unit of risk. If you would invest 358.00 in Koninklijke KPN NV on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Koninklijke KPN NV or generate 0.28% 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. Lion Biotechnologies
Performance |
| Timeline |
| Koninklijke KPN NV |
| Lion Biotechnologies |
Koninklijke KPN and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Lion Biotechnologies
The main advantage of trading using opposite Koninklijke KPN and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Koninklijke KPN vs. Superior Plus Corp | Koninklijke KPN vs. SIVERS SEMICONDUCTORS AB | Koninklijke KPN vs. Norsk Hydro ASA | Koninklijke KPN vs. Reliance Steel Aluminum |
| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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