Correlation Between Koninklijke KPN and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and SHELF DRILLING 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on Koninklijke KPN and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and SHELF DRILLING.
Diversification Opportunities for Koninklijke KPN and SHELF DRILLING
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Koninklijke and SHELF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and SHELF DRILLING go up and down completely randomly.
Pair Corralation between Koninklijke KPN and SHELF DRILLING
Assuming the 90 days horizon Koninklijke KPN NV is expected to generate 0.2 times more return on investment than SHELF DRILLING. However, Koninklijke KPN NV is 4.91 times less risky than SHELF DRILLING. It trades about 0.07 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.02 per unit of risk. If you would invest 290.00 in Koninklijke KPN NV on September 2, 2024 and sell it today you would earn a total of 76.00 from holding Koninklijke KPN NV or generate 26.21% 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. SHELF DRILLING LTD
Performance |
| Timeline |
| Koninklijke KPN NV |
| SHELF DRILLING LTD |
Koninklijke KPN and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and SHELF DRILLING
The main advantage of trading using opposite Koninklijke KPN and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| Koninklijke KPN vs. RETAIL FOOD GROUP | Koninklijke KPN vs. Gruppo Mutuionline SpA | Koninklijke KPN vs. YATRA ONLINE DL 0001 | Koninklijke KPN vs. Retail Estates NV |
| SHELF DRILLING vs. United Natural Foods | SHELF DRILLING vs. PT Indofood Sukses | SHELF DRILLING vs. Dairy Farm International | SHELF DRILLING vs. TYSON FOODS A |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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