Correlation Between NV Nederlandsche and Avantium Holding

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

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

Diversification Opportunities for NV Nederlandsche and Avantium Holding

0.42

Correlation Coefficient

NV Nederlandsche  Avantium Holding

Very weak diversification

The 3 months correlation between NEDAP and Avantium is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NV Nederlandsche Apparatenfabr and Avantium Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantium Holding and NV Nederlandsche 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 NV Nederlandsche Apparatenfabriek are associated (or correlated) with Avantium Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantium Holding has no effect on the direction of NV Nederlandsche i.e., NV Nederlandsche and Avantium Holding go up and down completely randomly.

Pair Corralation between NV Nederlandsche and Avantium Holding

Assuming the 90 days trading horizon NV Nederlandsche Apparatenfabriek is expected to generate 0.5 times more return on investment than Avantium Holding. However, NV Nederlandsche Apparatenfabriek is 1.98 times less risky than Avantium Holding. It trades about 0.1 of its potential returns per unit of risk. Avantium Holding BV is currently generating about 0.02 per unit of risk. If you would invest  5,400  in NV Nederlandsche Apparatenfabriek on October 10, 2024 and sell it today you would earn a total of  100.00  from holding NV Nederlandsche Apparatenfabriek or generate 1.85% return on investment over 90 days.

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

NV Nederlandsche Apparatenfabr  vs.  Avantium Holding BV

NV Nederlandsche App

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avantium Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantium Holding BV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NV Nederlandsche and Avantium Holding

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

The idea behind NV Nederlandsche Apparatenfabriek and Avantium Holding BV 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.