Correlation Between Carrefour and Koninklijke Ahold

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

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

Diversification Opportunities for Carrefour and Koninklijke Ahold

-0.26

Correlation Coefficient

Carrefour  Koninklijke Ahold

Very good diversification

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

Pair Corralation between Carrefour and Koninklijke Ahold

Assuming the 90 days horizon Carrefour SA is expected to under-perform the Koninklijke Ahold. In addition to that, Carrefour is 1.1 times more volatile than Koninklijke Ahold Delhaize. It trades about -0.04 of its total potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.07 per unit of volatility. If you would invest  3,335  in Koninklijke Ahold Delhaize on December 2, 2024 and sell it today you would earn a total of  268.00  from holding Koninklijke Ahold Delhaize or generate 8.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Carrefour SA  vs.  Koninklijke Ahold Delhaize

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Koninklijke Ahold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Koninklijke Ahold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carrefour and Koninklijke Ahold

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

The idea behind Carrefour SA and Koninklijke Ahold Delhaize 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.