Correlation Between NV Nederlandsche and Koninklijke Ahold
Can any of the company-specific risk be diversified away by investing in both NV Nederlandsche and Koninklijke Ahold 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 NV Nederlandsche and Koninklijke Ahold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NV Nederlandsche Apparatenfabriek and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on NV Nederlandsche and Koninklijke Ahold 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 NV Nederlandsche with a short position of Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of NV Nederlandsche and Koninklijke Ahold.
Diversification Opportunities for NV Nederlandsche and Koninklijke Ahold
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEDAP and Koninklijke is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NV Nederlandsche Apparatenfabr and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and NV Nederlandsche 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 NV Nederlandsche Apparatenfabriek are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of NV Nederlandsche i.e., NV Nederlandsche and Koninklijke Ahold go up and down completely randomly.
Pair Corralation between NV Nederlandsche and Koninklijke Ahold
Assuming the 90 days trading horizon NV Nederlandsche Apparatenfabriek is expected to under-perform the Koninklijke Ahold. But the stock apears to be less risky and, when comparing its historical volatility, NV Nederlandsche Apparatenfabriek is 1.75 times less risky than Koninklijke Ahold. The stock trades about -0.51 of its potential returns per unit of risk. The Koninklijke Ahold Delhaize is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,097 in Koninklijke Ahold Delhaize on August 27, 2024 and sell it today you would earn a total of 186.00 from holding Koninklijke Ahold Delhaize or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NV Nederlandsche Apparatenfabr vs. Koninklijke Ahold Delhaize
Performance |
| Timeline |
| NV Nederlandsche App |
| Koninklijke Ahold |
NV Nederlandsche and Koninklijke Ahold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NV Nederlandsche and Koninklijke Ahold
The main advantage of trading using opposite NV Nederlandsche and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV Nederlandsche position performs unexpectedly, Koninklijke Ahold 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 Koninklijke Ahold will offset losses from the drop in Koninklijke Ahold's long position.| NV Nederlandsche vs. TKH Group NV | NV Nederlandsche vs. Aalberts Industries NV | NV Nederlandsche vs. Amsterdam Commodities NV | NV Nederlandsche vs. iShares SP 500 |
| Koninklijke Ahold vs. Unilever PLC | Koninklijke Ahold vs. Koninklijke Philips NV | Koninklijke Ahold vs. NN Group NV | Koninklijke Ahold vs. ING Groep 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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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