Correlation Between TKH Group and Arcadis NV
Can any of the company-specific risk be diversified away by investing in both TKH Group and Arcadis NV 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 TKH Group and Arcadis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKH Group NV and Arcadis NV, you can compare the effects of market volatilities on TKH Group and Arcadis NV 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 TKH Group with a short position of Arcadis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKH Group and Arcadis NV.
Diversification Opportunities for TKH Group and Arcadis NV
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TKH and Arcadis is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV and TKH Group 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 TKH Group NV are associated (or correlated) with Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of TKH Group i.e., TKH Group and Arcadis NV go up and down completely randomly.
Pair Corralation between TKH Group and Arcadis NV
Assuming the 90 days trading horizon TKH Group NV is expected to under-perform the Arcadis NV. In addition to that, TKH Group is 1.48 times more volatile than Arcadis NV. It trades about -0.15 of its total potential returns per unit of risk. Arcadis NV is currently generating about -0.07 per unit of volatility. If you would invest 6,610 in Arcadis NV on September 2, 2024 and sell it today you would lose (365.00) from holding Arcadis NV or give up 5.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TKH Group NV vs. Arcadis NV
Performance |
| Timeline |
| TKH Group NV |
| Arcadis NV |
TKH Group and Arcadis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKH Group and Arcadis NV
The main advantage of trading using opposite TKH Group and Arcadis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKH Group position performs unexpectedly, Arcadis NV 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 Arcadis NV will offset losses from the drop in Arcadis NV's long position.| TKH Group vs. Aalberts Industries NV | TKH Group vs. BE Semiconductor Industries | TKH Group vs. AMG Advanced Metallurgical | TKH Group vs. Koninklijke Vopak NV |
| Arcadis NV vs. Aalberts Industries NV | Arcadis NV vs. TKH Group NV | Arcadis NV vs. Koninklijke BAM Groep | Arcadis NV vs. SBM Offshore 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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