Correlation Between Koninklijke Heijmans and Resurs Holding

Can any of the company-specific risk be diversified away by investing in both Koninklijke Heijmans and Resurs Holding 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 Resurs Holding 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 Resurs Holding AB, you can compare the effects of market volatilities on Koninklijke Heijmans and Resurs Holding 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 Resurs Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Heijmans and Resurs Holding.

Diversification Opportunities for Koninklijke Heijmans and Resurs Holding

0.41

Correlation Coefficient

Koninklijke Heijmans  Resurs Holding

Very weak diversification

The 3 months correlation between Koninklijke and Resurs is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Heijmans NV and Resurs Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resurs Holding AB 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 Resurs Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resurs Holding AB has no effect on the direction of Koninklijke Heijmans i.e., Koninklijke Heijmans and Resurs Holding go up and down completely randomly.

Pair Corralation between Koninklijke Heijmans and Resurs Holding

Assuming the 90 days trading horizon Koninklijke Heijmans NV is expected to generate 16.19 times more return on investment than Resurs Holding. However, Koninklijke Heijmans is 16.19 times more volatile than Resurs Holding AB. It trades about 0.2 of its potential returns per unit of risk. Resurs Holding AB is currently generating about 0.02 per unit of risk. If you would invest  2,965  in Koninklijke Heijmans NV on December 2, 2024 and sell it today you would earn a total of  1,075  from holding Koninklijke Heijmans NV or generate 36.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Koninklijke Heijmans NV  vs.  Resurs Holding AB

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 15 (%) 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.

Resurs Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Resurs Holding AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Resurs Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koninklijke Heijmans and Resurs Holding

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

The idea behind Koninklijke Heijmans NV and Resurs Holding AB 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.