Correlation Between Kendrion and ASR Nederland

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

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

Diversification Opportunities for Kendrion and ASR Nederland

-0.34

Correlation Coefficient

Kendrion  ASR Nederland

Very good diversification

The 3 months correlation between Kendrion and ASR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kendrion NV and ASR Nederland NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASR Nederland NV and Kendrion 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 Kendrion NV are associated (or correlated) with ASR Nederland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASR Nederland NV has no effect on the direction of Kendrion i.e., Kendrion and ASR Nederland go up and down completely randomly.

Pair Corralation between Kendrion and ASR Nederland

Assuming the 90 days trading horizon Kendrion NV is expected to under-perform the ASR Nederland. In addition to that, Kendrion is 1.57 times more volatile than ASR Nederland NV. It trades about -0.14 of its total potential returns per unit of risk. ASR Nederland NV is currently generating about -0.09 per unit of volatility. If you would invest  4,628  in ASR Nederland NV on October 7, 2024 and sell it today you would lose (63.00) from holding ASR Nederland NV or give up 1.36% of portfolio value over 90 days.

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

Kendrion NV  vs.  ASR Nederland NV

Kendrion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kendrion NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

ASR Nederland NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASR Nederland NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ASR Nederland is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kendrion and ASR Nederland

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

The idea behind Kendrion NV and ASR Nederland 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.