Correlation Between Village Super and Koninklijke Ahold

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

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

Diversification Opportunities for Village Super and Koninklijke Ahold

0.43

Correlation Coefficient

Village Super  Koninklijke Ahold

Very weak diversification

The 3 months correlation between Village and Koninklijke is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and Village Super 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 Village Super Market 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 Village Super i.e., Village Super and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Village Super and Koninklijke Ahold

Assuming the 90 days horizon Village Super Market is expected to generate 0.67 times more return on investment than Koninklijke Ahold. However, Village Super Market is 1.49 times less risky than Koninklijke Ahold. It trades about 0.06 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.03 per unit of risk. If you would invest  2,126  in Village Super Market on September 30, 2024 and sell it today you would earn a total of  1,028  from holding Village Super Market or generate 48.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.9%
Values	Daily Returns

Village Super Market  vs.  Koninklijke Ahold Delhaize

Village Super Market

Risk-Adjusted Performance

0 of 100

Very Weak

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

Koninklijke Ahold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Ahold Delhaize has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Koninklijke Ahold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Village Super and Koninklijke Ahold

The main advantage of trading using opposite Village Super and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super 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 Village Super Market 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.