Correlation Between Koninklijke Philips and Sonova Holding
Can any of the company-specific risk be diversified away by investing in both Koninklijke Philips and Sonova Holding 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 Sonova Holding 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 Sonova Holding AG, you can compare the effects of market volatilities on Koninklijke Philips and Sonova Holding 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 Sonova Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Philips and Sonova Holding.
Diversification Opportunities for Koninklijke Philips and Sonova Holding
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Koninklijke and Sonova is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Sonova Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova Holding AG 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 Sonova Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova Holding AG has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and Sonova Holding go up and down completely randomly.
Pair Corralation between Koninklijke Philips and Sonova Holding
Assuming the 90 days horizon Koninklijke Philips NV is expected to generate 1.13 times more return on investment than Sonova Holding. However, Koninklijke Philips is 1.13 times more volatile than Sonova Holding AG. It trades about 0.04 of its potential returns per unit of risk. Sonova Holding AG is currently generating about -0.23 per unit of risk. If you would invest 2,558 in Koninklijke Philips NV on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Koninklijke Philips NV or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke Philips NV vs. Sonova Holding AG
Performance |
| Timeline |
| Koninklijke Philips |
| Sonova Holding AG |
Koninklijke Philips and Sonova Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke Philips and Sonova Holding
The main advantage of trading using opposite Koninklijke Philips and Sonova Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips position performs unexpectedly, Sonova Holding 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 Sonova Holding will offset losses from the drop in Sonova Holding's long position.| Koninklijke Philips vs. Sonova Holding AG | Koninklijke Philips vs. Medtronic PLC | Koninklijke Philips vs. CONMED | Koninklijke Philips vs. Glaukos Corp |
| Sonova Holding vs. GN Store Nord | Sonova Holding vs. GN Store Nord | Sonova Holding vs. Bone Biologics Corp | Sonova Holding vs. Smith Nephew plc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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