Correlation Between TKH Group and NN Group
Can any of the company-specific risk be diversified away by investing in both TKH Group and NN Group 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 NN Group 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 NN Group NV, you can compare the effects of market volatilities on TKH Group and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKH Group and NN Group.
Diversification Opportunities for TKH Group and NN Group
Average diversification
The 3 months correlation between TKH and NN Group is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of TKH Group i.e., TKH Group and NN Group go up and down completely randomly.
Pair Corralation between TKH Group and NN Group
Assuming the 90 days trading horizon TKH Group NV is expected to under-perform the NN Group. In addition to that, TKH Group is 2.12 times more volatile than NN Group NV. It trades about -0.25 of its total potential returns per unit of risk. NN Group NV is currently generating about -0.06 per unit of volatility. If you would invest 4,494 in NN Group NV on August 28, 2024 and sell it today you would lose (104.00) from holding NN Group NV or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TKH Group NV vs. NN Group NV
Performance |
| Timeline |
| TKH Group NV |
| NN Group NV |
TKH Group and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKH Group and NN Group
The main advantage of trading using opposite TKH Group and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKH Group position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group'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 |
| NN Group vs. ASR Nederland NV | NN Group vs. Aegon NV | NN Group vs. Koninklijke Ahold Delhaize | NN Group vs. ABN Amro Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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