Correlation Between Arcadis NV and Skanska AB

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

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

Diversification Opportunities for Arcadis NV and Skanska AB

-0.26

Correlation Coefficient

Arcadis NV  Skanska AB

Very good diversification

The 3 months correlation between Arcadis and Skanska is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of Arcadis NV i.e., Arcadis NV and Skanska AB go up and down completely randomly.

Pair Corralation between Arcadis NV and Skanska AB

Assuming the 90 days horizon Arcadis NV is expected to under-perform the Skanska AB. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arcadis NV is 1.52 times less risky than Skanska AB. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Skanska AB ser is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,033  in Skanska AB ser on September 14, 2024 and sell it today you would earn a total of  89.00  from holding Skanska AB ser or generate 4.38% return on investment over 90 days.

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

Arcadis NV  vs.  Skanska AB ser

Arcadis NV

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Skanska AB ser

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB ser are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Skanska AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arcadis NV and Skanska AB

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

The idea behind Arcadis NV and Skanska AB ser 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.