Correlation Between Klepierre and Koninklijke BAM

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

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

Diversification Opportunities for Klepierre and Koninklijke BAM

-0.04

Correlation Coefficient

Klepierre  Koninklijke BAM

Good diversification

The 3 months correlation between Klepierre and Koninklijke is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Klepierre SA and Koninklijke BAM Groep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke BAM Groep and Klepierre 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 Klepierre SA are associated (or correlated) with Koninklijke BAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke BAM Groep has no effect on the direction of Klepierre i.e., Klepierre and Koninklijke BAM go up and down completely randomly.

Pair Corralation between Klepierre and Koninklijke BAM

Assuming the 90 days horizon Klepierre SA is expected to generate about the same return on investment as Koninklijke BAM Groep. But, Klepierre SA is 1.89 times less risky than Koninklijke BAM. It trades about -0.1 of its potential returns per unit of risk. Koninklijke BAM Groep is currently generating about -0.05 per unit of risk. If you would invest  440.00  in Koninklijke BAM Groep on October 26, 2024 and sell it today you would lose (30.00) from holding Koninklijke BAM Groep or give up 6.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Klepierre SA  vs.  Koninklijke BAM Groep

Klepierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klepierre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Klepierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Koninklijke BAM Groep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke BAM Groep has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Koninklijke BAM is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Klepierre and Koninklijke BAM

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

The idea behind Klepierre SA and Koninklijke BAM Groep 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.