Correlation Between Amsterdam Commodities and Holland Colours

Can any of the company-specific risk be diversified away by investing in both Amsterdam Commodities and Holland Colours 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 Amsterdam Commodities and Holland Colours into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amsterdam Commodities NV and Holland Colours NV, you can compare the effects of market volatilities on Amsterdam Commodities and Holland Colours 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 Amsterdam Commodities with a short position of Holland Colours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amsterdam Commodities and Holland Colours.

Diversification Opportunities for Amsterdam Commodities and Holland Colours

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Correlation Coefficient

Amsterdam Commodities  Holland Colours

Pay attention - limited upside

The 3 months correlation between Amsterdam and Holland is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amsterdam Commodities NV and Holland Colours NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holland Colours NV and Amsterdam Commodities 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 Amsterdam Commodities NV are associated (or correlated) with Holland Colours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holland Colours NV has no effect on the direction of Amsterdam Commodities i.e., Amsterdam Commodities and Holland Colours go up and down completely randomly.

Pair Corralation between Amsterdam Commodities and Holland Colours

Assuming the 90 days trading horizon Amsterdam Commodities is expected to generate 1.05 times less return on investment than Holland Colours. But when comparing it to its historical volatility, Amsterdam Commodities NV is 1.79 times less risky than Holland Colours. It trades about 0.09 of its potential returns per unit of risk. Holland Colours NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,150  in Holland Colours NV on September 13, 2024 and sell it today you would earn a total of  150.00  from holding Holland Colours NV or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Amsterdam Commodities NV  vs.  Holland Colours NV

Amsterdam Commodities

Risk-Adjusted Performance

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Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amsterdam Commodities NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Amsterdam Commodities is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Holland Colours NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holland Colours NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Holland Colours is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amsterdam Commodities and Holland Colours

The main advantage of trading using opposite Amsterdam Commodities and Holland Colours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amsterdam Commodities position performs unexpectedly, Holland Colours 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 Holland Colours will offset losses from the drop in Holland Colours' long position.

The idea behind Amsterdam Commodities NV and Holland Colours NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.