Correlation Between Alfen Beheer and CM NV

Can any of the company-specific risk be diversified away by investing in both Alfen Beheer and CM 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 Alfen Beheer and CM NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alfen Beheer and CM NV

0.46

Correlation Coefficient

Alfen Beheer  CM NV

Very weak diversification

The 3 months correlation between Alfen and CMCOM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alfen Beheer BV and CM NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM NV and Alfen Beheer 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 Alfen Beheer BV are associated (or correlated) with CM NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM NV has no effect on the direction of Alfen Beheer i.e., Alfen Beheer and CM NV go up and down completely randomly.

Pair Corralation between Alfen Beheer and CM NV

Assuming the 90 days trading horizon Alfen Beheer BV is expected to generate 1.39 times more return on investment than CM NV. However, Alfen Beheer is 1.39 times more volatile than CM NV. It trades about 0.1 of its potential returns per unit of risk. CM NV is currently generating about -0.1 per unit of risk. If you would invest  1,219  in Alfen Beheer BV on October 10, 2024 and sell it today you would earn a total of  112.00  from holding Alfen Beheer BV or generate 9.19% return on investment over 90 days.

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

Alfen Beheer BV  vs.  CM NV

Alfen Beheer BV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfen Beheer BV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Alfen Beheer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CM NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CM NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alfen Beheer and CM NV

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

The idea behind Alfen Beheer BV and CM 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.