Correlation Between Koninklijke Philips and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Flow Traders 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 Philips and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Philips NV and Flow Traders BV, you can compare the effects of market volatilities on Koninklijke Philips and Flow Traders 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 Philips with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Flow Traders.
Diversification Opportunities for Koninklijke Philips and Flow Traders
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Koninklijke and Flow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Flow Traders BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders BV and Koninklijke Philips 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 Philips NV are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders BV has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Flow Traders go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Flow Traders
Assuming the 90 days trading horizon Koninklijke Philips is expected to generate 1.3 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Koninklijke Philips NV is 1.08 times less risky than Flow Traders. It trades about 0.03 of its potential returns per unit of risk. Flow Traders BV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,957 in Flow Traders BV on September 2, 2024 and sell it today you would earn a total of 153.00 from holding Flow Traders BV or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Flow Traders BV
Performance |
| Timeline |
| Koninklijke Philips |
| Flow Traders BV |
Koninklijke Philips and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Flow Traders
The main advantage of trading using opposite Koninklijke Philips and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Koninklijke Philips vs. Unilever PLC | Koninklijke Philips vs. ING Groep NV | Koninklijke Philips vs. Aegon NV | Koninklijke Philips vs. Koninklijke Ahold Delhaize |
| Flow Traders vs. NN Group NV | Flow Traders vs. BE Semiconductor Industries | Flow Traders vs. Koninklijke Ahold Delhaize | Flow Traders vs. ASR Nederland 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |