Correlation Between Koninklijke KPN and Signify NV

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

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

Diversification Opportunities for Koninklijke KPN and Signify NV

0.0

Correlation Coefficient

Koninklijke KPN  Signify NV

Pay attention - limited upside

The 3 months correlation between Koninklijke and Signify is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV and Koninklijke KPN 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 KPN NV are associated (or correlated) with Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Signify NV go up and down completely randomly.

Pair Corralation between Koninklijke KPN and Signify NV

If you would invest (100.00) in Signify NV on October 7, 2024 and sell it today you would earn a total of  100.00  from holding Signify NV or generate -100.0% return on investment over 90 days.

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

Koninklijke KPN NV  vs.  Signify NV

Koninklijke KPN NV

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Koninklijke KPN NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Koninklijke KPN is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Signify NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signify NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Signify NV 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 KPN and Signify NV

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

The idea behind Koninklijke KPN NV and Signify 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.