Correlation Between Wereldhave and Koninklijke BAM

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

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

Diversification Opportunities for Wereldhave and Koninklijke BAM

0.59

Correlation Coefficient

Wereldhave  Koninklijke BAM

Very weak diversification

The 3 months correlation between Wereldhave and Koninklijke is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wereldhave 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 Wereldhave 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 Wereldhave 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 Wereldhave i.e., Wereldhave and Koninklijke BAM go up and down completely randomly.

Pair Corralation between Wereldhave and Koninklijke BAM

Assuming the 90 days trading horizon Wereldhave NV is expected to generate 0.46 times more return on investment than Koninklijke BAM. However, Wereldhave NV is 2.17 times less risky than Koninklijke BAM. It trades about -0.07 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  1,458  in Wereldhave NV on October 26, 2024 and sell it today you would lose (54.00) from holding Wereldhave NV or give up 3.7% of portfolio value over 90 days.

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

Wereldhave NV  vs.  Koninklijke BAM Groep

Wereldhave NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wereldhave NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Wereldhave is not utilizing all of its potentials. The current 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 Wereldhave and Koninklijke BAM

The main advantage of trading using opposite Wereldhave and Koninklijke BAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wereldhave 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 Wereldhave 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.