Correlation Between Randstad and Koninklijke BAM
Can any of the company-specific risk be diversified away by investing in both Randstad and Koninklijke BAM 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 Randstad and Koninklijke BAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Randstad NV and Koninklijke BAM Groep, you can compare the effects of market volatilities on Randstad and Koninklijke BAM 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 Randstad with a short position of Koninklijke BAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Randstad and Koninklijke BAM.
Diversification Opportunities for Randstad and Koninklijke BAM
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Randstad and Koninklijke is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Randstad NV and Koninklijke BAM Groep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke BAM Groep and Randstad 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 Randstad NV are associated (or correlated) with Koninklijke BAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke BAM Groep has no effect on the direction of Randstad i.e., Randstad and Koninklijke BAM go up and down completely randomly.
Pair Corralation between Randstad and Koninklijke BAM
Assuming the 90 days trading horizon Randstad NV is expected to under-perform the Koninklijke BAM. But the stock apears to be less risky and, when comparing its historical volatility, Randstad NV is 1.41 times less risky than Koninklijke BAM. The stock trades about -0.01 of its potential returns per unit of risk. The Koninklijke BAM Groep is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 186.00 in Koninklijke BAM Groep on September 5, 2024 and sell it today you would earn a total of 230.00 from holding Koninklijke BAM Groep or generate 123.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Randstad NV vs. Koninklijke BAM Groep
Performance |
| Timeline |
| Randstad NV |
| Koninklijke BAM Groep |
Randstad and Koninklijke BAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Randstad and Koninklijke BAM
The main advantage of trading using opposite Randstad and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad position performs unexpectedly, Koninklijke BAM 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 BAM will offset losses from the drop in Koninklijke BAM's long position.| Randstad vs. Wolters Kluwer NV | Randstad vs. Aalberts Industries NV | Randstad vs. ASM International NV | Randstad vs. ASR Nederland NV |
| Koninklijke BAM vs. Fugro NV | Koninklijke BAM vs. SBM Offshore NV | Koninklijke BAM vs. Aegon NV | Koninklijke BAM vs. PostNL 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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