Correlation Between Koninklijke Ahold and Ebusco Holding

Can any of the company-specific risk be diversified away by investing in both Koninklijke Ahold and Ebusco 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 Ahold and Ebusco Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koninklijke Ahold Delhaize and Ebusco Holding BV, you can compare the effects of market volatilities on Koninklijke Ahold and Ebusco 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 Ahold with a short position of Ebusco Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and Ebusco Holding.

Diversification Opportunities for Koninklijke Ahold and Ebusco Holding

-0.65

Correlation Coefficient

Koninklijke Ahold  Ebusco Holding

Excellent diversification

The 3 months correlation between Koninklijke and Ebusco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and Ebusco Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebusco Holding BV and Koninklijke Ahold 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 Ahold Delhaize are associated (or correlated) with Ebusco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebusco Holding BV has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and Ebusco Holding go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Ebusco Holding

Assuming the 90 days horizon Koninklijke Ahold Delhaize is expected to generate 0.07 times more return on investment than Ebusco Holding. However, Koninklijke Ahold Delhaize is 13.91 times less risky than Ebusco Holding. It trades about 0.16 of its potential returns per unit of risk. Ebusco Holding BV is currently generating about -0.01 per unit of risk. If you would invest  3,097  in Koninklijke Ahold Delhaize on October 26, 2024 and sell it today you would earn a total of  302.00  from holding Koninklijke Ahold Delhaize or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Koninklijke Ahold Delhaize  vs.  Ebusco Holding BV

Koninklijke Ahold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Koninklijke Ahold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ebusco Holding BV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebusco Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ebusco Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Koninklijke Ahold and Ebusco Holding

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

The idea behind Koninklijke Ahold Delhaize and Ebusco Holding BV 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.