Correlation Between Koninklijke Ahold and Seven I

Can any of the company-specific risk be diversified away by investing in both Koninklijke Ahold and Seven I 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 Seven I 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 Seven i Holdings, you can compare the effects of market volatilities on Koninklijke Ahold and Seven I 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 Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and Seven I.

Diversification Opportunities for Koninklijke Ahold and Seven I

0.82

Correlation Coefficient

Koninklijke Ahold  Seven I

Very poor diversification

The 3 months correlation between Koninklijke and Seven is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and Seven I go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Seven I

Assuming the 90 days trading horizon Koninklijke Ahold Delhaize is expected to generate 0.38 times more return on investment than Seven I. However, Koninklijke Ahold Delhaize is 2.63 times less risky than Seven I. It trades about 0.03 of its potential returns per unit of risk. Seven i Holdings is currently generating about -0.1 per unit of risk. If you would invest  3,214  in Koninklijke Ahold Delhaize on October 12, 2024 and sell it today you would earn a total of  12.00  from holding Koninklijke Ahold Delhaize or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.44%
Values	Daily Returns

Koninklijke Ahold Delhaize  vs.  Seven i Holdings

Koninklijke Ahold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Koninklijke Ahold may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Seven i Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Seven I is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Koninklijke Ahold and Seven I

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

The idea behind Koninklijke Ahold Delhaize and Seven i Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..