Correlation Between VGP NV and Koninklijke Heijmans

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

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

Diversification Opportunities for VGP NV and Koninklijke Heijmans

-0.57

Correlation Coefficient

VGP NV  Koninklijke Heijmans

Excellent diversification

The 3 months correlation between VGP and Koninklijke is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding VGP NV and Koninklijke Heijmans NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Heijmans and VGP NV 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 VGP NV are associated (or correlated) with Koninklijke Heijmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Heijmans has no effect on the direction of VGP NV i.e., VGP NV and Koninklijke Heijmans go up and down completely randomly.

Pair Corralation between VGP NV and Koninklijke Heijmans

Assuming the 90 days trading horizon VGP NV is expected to under-perform the Koninklijke Heijmans. But the stock apears to be less risky and, when comparing its historical volatility, VGP NV is 1.46 times less risky than Koninklijke Heijmans. The stock trades about -0.2 of its potential returns per unit of risk. The Koninklijke Heijmans NV is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,325  in Koninklijke Heijmans NV on September 13, 2024 and sell it today you would earn a total of  780.00  from holding Koninklijke Heijmans NV or generate 33.55% return on investment over 90 days.

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

VGP NV  vs.  Koninklijke Heijmans NV

VGP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VGP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Koninklijke Heijmans

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Heijmans NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koninklijke Heijmans sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VGP NV and Koninklijke Heijmans

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

The idea behind VGP NV and Koninklijke Heijmans 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.