Correlation Between Koninklijke Vopak and Koninklijke BAM

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

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

Diversification Opportunities for Koninklijke Vopak and Koninklijke BAM

-0.29

Correlation Coefficient

Koninklijke Vopak  Koninklijke BAM

Very good diversification

The 3 months correlation between Koninklijke and Koninklijke is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Vopak NV 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 Koninklijke Vopak 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 Koninklijke Vopak NV 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 Koninklijke Vopak i.e., Koninklijke Vopak and Koninklijke BAM go up and down completely randomly.

Pair Corralation between Koninklijke Vopak and Koninklijke BAM

Assuming the 90 days trading horizon Koninklijke Vopak NV is expected to generate 0.79 times more return on investment than Koninklijke BAM. However, Koninklijke Vopak NV is 1.27 times less risky than Koninklijke BAM. It trades about 0.0 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  4,358  in Koninklijke Vopak NV on October 27, 2024 and sell it today you would lose (12.00) from holding Koninklijke Vopak NV or give up 0.28% of portfolio value over 90 days.

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

Koninklijke Vopak NV  vs.  Koninklijke BAM Groep

Koninklijke Vopak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Vopak NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Koninklijke Vopak is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 Koninklijke Vopak and Koninklijke BAM

The main advantage of trading using opposite Koninklijke Vopak and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Vopak 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 Koninklijke Vopak NV 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.