Correlation Between Bilfinger and Arcadis NV

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

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

Diversification Opportunities for Bilfinger and Arcadis NV

-0.62

Correlation Coefficient

Bilfinger  Arcadis NV

Excellent diversification

The 3 months correlation between Bilfinger and Arcadis is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bilfinger SE ADR and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV and Bilfinger 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 Bilfinger SE ADR are associated (or correlated) with Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of Bilfinger i.e., Bilfinger and Arcadis NV go up and down completely randomly.

Pair Corralation between Bilfinger and Arcadis NV

Assuming the 90 days horizon Bilfinger SE ADR is expected to generate 2.03 times more return on investment than Arcadis NV. However, Bilfinger is 2.03 times more volatile than Arcadis NV. It trades about 0.17 of its potential returns per unit of risk. Arcadis NV is currently generating about -0.08 per unit of risk. If you would invest  942.00  in Bilfinger SE ADR on December 30, 2024 and sell it today you would earn a total of  473.00  from holding Bilfinger SE ADR or generate 50.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Bilfinger SE ADR  vs.  Arcadis NV

Bilfinger SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bilfinger showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Bilfinger and Arcadis NV

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

The idea behind Bilfinger SE ADR and Arcadis 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.