Correlation Between Koninklijke Heijmans and TF Bank

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

Diversification Opportunities for Koninklijke Heijmans and TF Bank

0.52

Correlation Coefficient

Koninklijke Heijmans  TF Bank

Very weak diversification

The 3 months correlation between Koninklijke and TFBANK is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Heijmans NV and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank 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 TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Koninklijke Heijmans i.e., Koninklijke Heijmans and TF Bank go up and down completely randomly.

Pair Corralation between Koninklijke Heijmans and TF Bank

Assuming the 90 days trading horizon Koninklijke Heijmans is expected to generate 2.19 times less return on investment than TF Bank. In addition to that, Koninklijke Heijmans is 1.17 times more volatile than TF Bank AB. It trades about 0.09 of its total potential returns per unit of risk. TF Bank AB is currently generating about 0.24 per unit of volatility. If you would invest  24,700  in TF Bank AB on September 2, 2024 and sell it today you would earn a total of  10,000  from holding TF Bank AB or generate 40.49% return on investment over 90 days.

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

Koninklijke Heijmans NV  vs.  TF Bank AB

Koninklijke Heijmans

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Heijmans NV are ranked lower than 7 (%) 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.

TF Bank AB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koninklijke Heijmans and TF Bank

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

The idea behind Koninklijke Heijmans NV and TF Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.