Correlation Between Arcadis NV and Acciona SA

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

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

Diversification Opportunities for Arcadis NV and Acciona SA

-0.25

Correlation Coefficient

Arcadis NV  Acciona SA

Very good diversification

The 3 months correlation between Arcadis and Acciona is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and Arcadis NV 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 Arcadis NV are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of Arcadis NV i.e., Arcadis NV and Acciona SA go up and down completely randomly.

Pair Corralation between Arcadis NV and Acciona SA

Assuming the 90 days horizon Arcadis NV is expected to under-perform the Acciona SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arcadis NV is 1.24 times less risky than Acciona SA. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Acciona SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,865  in Acciona SA on December 30, 2024 and sell it today you would earn a total of  1,875  from holding Acciona SA or generate 17.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Arcadis NV  vs.  Acciona SA

Arcadis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Acciona SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acciona SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Acciona SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcadis NV and Acciona SA

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

The idea behind Arcadis NV and Acciona SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.