Correlation Between Koninklijke Heijmans and CVC Capital

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

By analyzing existing cross correlation between Koninklijke Heijmans NV and CVC Capital Partners, you can compare the effects of market volatilities on Koninklijke Heijmans and CVC Capital 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 Koninklijke Heijmans with a short position of CVC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Heijmans and CVC Capital.

Diversification Opportunities for Koninklijke Heijmans and CVC Capital

0.24

Correlation Coefficient

Koninklijke Heijmans  CVC Capital

Modest diversification

The 3 months correlation between Koninklijke and CVC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Heijmans NV and CVC Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVC Capital Partners and Koninklijke Heijmans 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 Koninklijke Heijmans NV are associated (or correlated) with CVC Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVC Capital Partners has no effect on the direction of Koninklijke Heijmans i.e., Koninklijke Heijmans and CVC Capital go up and down completely randomly.

Pair Corralation between Koninklijke Heijmans and CVC Capital

Assuming the 90 days trading horizon Koninklijke Heijmans NV is expected to generate 1.31 times more return on investment than CVC Capital. However, Koninklijke Heijmans is 1.31 times more volatile than CVC Capital Partners. It trades about 0.16 of its potential returns per unit of risk. CVC Capital Partners is currently generating about -0.08 per unit of risk. If you would invest  3,150  in Koninklijke Heijmans NV on December 5, 2024 and sell it today you would earn a total of  850.00  from holding Koninklijke Heijmans NV or generate 26.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Koninklijke Heijmans NV  vs.  CVC Capital Partners

Koninklijke Heijmans

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Heijmans NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koninklijke Heijmans sustained solid returns over the last few months and may actually be approaching a breakup point.

CVC Capital Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVC Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Koninklijke Heijmans and CVC Capital

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

The idea behind Koninklijke Heijmans NV and CVC Capital Partners 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.