Correlation Between SEVEN+I HLDGS and Koninklijke Ahold

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

By analyzing existing cross correlation between SEVENI HLDGS UNSPADR12 and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on SEVEN+I HLDGS and Koninklijke Ahold 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 SEVEN+I HLDGS with a short position of Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEVEN+I HLDGS and Koninklijke Ahold.

Diversification Opportunities for SEVEN+I HLDGS and Koninklijke Ahold

-0.53

Correlation Coefficient

SEVEN+I HLDGS  Koninklijke Ahold

Excellent diversification

The 3 months correlation between SEVEN+I and Koninklijke is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SEVENI HLDGS UNSPADR12 and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and SEVEN+I HLDGS 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 SEVENI HLDGS UNSPADR12 are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of SEVEN+I HLDGS i.e., SEVEN+I HLDGS and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between SEVEN+I HLDGS and Koninklijke Ahold

Assuming the 90 days trading horizon SEVENI HLDGS UNSPADR12 is expected to generate 10.22 times more return on investment than Koninklijke Ahold. However, SEVEN+I HLDGS is 10.22 times more volatile than Koninklijke Ahold Delhaize. It trades about 0.04 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.07 per unit of risk. If you would invest  1,044  in SEVENI HLDGS UNSPADR12 on September 23, 2024 and sell it today you would earn a total of  196.00  from holding SEVENI HLDGS UNSPADR12 or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.64%
Values	Daily Returns

SEVENI HLDGS UNSPADR12  vs.  Koninklijke Ahold Delhaize

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEVENI HLDGS UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SEVEN+I HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Koninklijke Ahold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Koninklijke Ahold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SEVEN+I HLDGS and Koninklijke Ahold

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

The idea behind SEVENI HLDGS UNSPADR12 and Koninklijke Ahold Delhaize 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.