Correlation Between Arcadis NV and ACS Actividades

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

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

Diversification Opportunities for Arcadis NV and ACS Actividades

-0.13

Correlation Coefficient

Arcadis NV  ACS Actividades

Good diversification

The 3 months correlation between Arcadis and ACS is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and ACS Actividades De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades De 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 ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades De has no effect on the direction of Arcadis NV i.e., Arcadis NV and ACS Actividades go up and down completely randomly.

Pair Corralation between Arcadis NV and ACS Actividades

Assuming the 90 days horizon Arcadis NV is expected to under-perform the ACS Actividades. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arcadis NV is 1.49 times less risky than ACS Actividades. The pink sheet trades about -0.16 of its potential returns per unit of risk. The ACS Actividades De is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  904.00  in ACS Actividades De on September 13, 2024 and sell it today you would earn a total of  94.00  from holding ACS Actividades De or generate 10.4% 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.  ACS Actividades De

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. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ACS Actividades De

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades De are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ACS Actividades may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arcadis NV and ACS Actividades

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

The idea behind Arcadis NV and ACS Actividades De 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.