Correlation Between Koninklijke Vopak and Inpost SA

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

Diversification Opportunities for Koninklijke Vopak and Inpost SA

0.33

Correlation Coefficient

Koninklijke Vopak  Inpost SA

Weak diversification

The 3 months correlation between Koninklijke and Inpost is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Vopak NV and Inpost SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpost SA 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 Inpost SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpost SA has no effect on the direction of Koninklijke Vopak i.e., Koninklijke Vopak and Inpost SA go up and down completely randomly.

Pair Corralation between Koninklijke Vopak and Inpost SA

Assuming the 90 days trading horizon Koninklijke Vopak NV is expected to generate 0.78 times more return on investment than Inpost SA. However, Koninklijke Vopak NV is 1.29 times less risky than Inpost SA. It trades about -0.05 of its potential returns per unit of risk. Inpost SA is currently generating about -0.08 per unit of risk. If you would invest  4,336  in Koninklijke Vopak NV on December 27, 2024 and sell it today you would lose (276.00) from holding Koninklijke Vopak NV or give up 6.37% of portfolio value over 90 days.

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

Koninklijke Vopak NV  vs.  Inpost SA

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Inpost SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inpost SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Koninklijke Vopak and Inpost SA

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

The idea behind Koninklijke Vopak NV and Inpost SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.