Correlation Between Arcadis NV and Api Group

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

By analyzing existing cross correlation between Arcadis NV and Api Group Corp, you can compare the effects of market volatilities on Arcadis NV and Api Group 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 Api Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadis NV and Api Group.

Diversification Opportunities for Arcadis NV and Api Group

0.09

Correlation Coefficient

Arcadis NV  Api Group

Significant diversification

The 3 months correlation between Arcadis and Api is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and Api Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Group Corp 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 Api Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Group Corp has no effect on the direction of Arcadis NV i.e., Arcadis NV and Api Group go up and down completely randomly.

Pair Corralation between Arcadis NV and Api Group

Assuming the 90 days horizon Arcadis NV is expected to under-perform the Api Group. In addition to that, Arcadis NV is 1.08 times more volatile than Api Group Corp. It trades about -0.08 of its total potential returns per unit of risk. Api Group Corp is currently generating about 0.03 per unit of volatility. If you would invest  3,600  in Api Group Corp on December 27, 2024 and sell it today you would earn a total of  70.00  from holding Api Group Corp or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Arcadis NV  vs.  Api Group Corp

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.

Api Group Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Arcadis NV and Api Group

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

The idea behind Arcadis NV and Api Group Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.