Correlation Between Koninklijke Vopak and HAL Trust

Can any of the company-specific risk be diversified away by investing in both Koninklijke Vopak and HAL Trust 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 HAL Trust 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 HAL Trust, you can compare the effects of market volatilities on Koninklijke Vopak and HAL Trust 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 HAL Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Vopak and HAL Trust.

Diversification Opportunities for Koninklijke Vopak and HAL Trust

-0.42

Correlation Coefficient

Koninklijke Vopak  HAL Trust

Very good diversification

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

Pair Corralation between Koninklijke Vopak and HAL Trust

Assuming the 90 days trading horizon Koninklijke Vopak NV is expected to under-perform the HAL Trust. In addition to that, Koninklijke Vopak is 2.13 times more volatile than HAL Trust. It trades about -0.04 of its total potential returns per unit of risk. HAL Trust is currently generating about 0.17 per unit of volatility. If you would invest  11,360  in HAL Trust on December 22, 2024 and sell it today you would earn a total of  1,040  from holding HAL Trust or generate 9.15% return on investment over 90 days.

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

Koninklijke Vopak NV  vs.  HAL Trust

Koninklijke Vopak

Risk-Adjusted Performance

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.

HAL Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAL Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, HAL Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Koninklijke Vopak and HAL Trust

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

The idea behind Koninklijke Vopak NV and HAL Trust 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.