Correlation Between Koninklijke Ahold and AHOLD DELHAIADR16

Can any of the company-specific risk be diversified away by investing in both Koninklijke Ahold and AHOLD DELHAIADR16 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 Ahold and AHOLD DELHAIADR16 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Koninklijke Ahold Delhaize and AHOLD DELHAIADR16 EO 25, you can compare the effects of market volatilities on Koninklijke Ahold and AHOLD DELHAIADR16 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 Ahold with a short position of AHOLD DELHAIADR16. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and AHOLD DELHAIADR16.

Diversification Opportunities for Koninklijke Ahold and AHOLD DELHAIADR16

0.88

Correlation Coefficient

Koninklijke Ahold  AHOLD DELHAIADR16

Very poor diversification

The 3 months correlation between Koninklijke and AHOLD is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and AHOLD DELHAIADR16 EO 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AHOLD DELHAIADR16 and Koninklijke Ahold 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 Ahold Delhaize are associated (or correlated) with AHOLD DELHAIADR16. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AHOLD DELHAIADR16 has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and AHOLD DELHAIADR16 go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and AHOLD DELHAIADR16

Assuming the 90 days trading horizon Koninklijke Ahold is expected to generate 1.1 times less return on investment than AHOLD DELHAIADR16. But when comparing it to its historical volatility, Koninklijke Ahold Delhaize is 1.32 times less risky than AHOLD DELHAIADR16. It trades about 0.09 of its potential returns per unit of risk. AHOLD DELHAIADR16 EO 25 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,452  in AHOLD DELHAIADR16 EO 25 on September 13, 2024 and sell it today you would earn a total of  708.00  from holding AHOLD DELHAIADR16 EO 25 or generate 28.87% return on investment over 90 days.

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

Koninklijke Ahold Delhaize  vs.  AHOLD DELHAIADR16 EO 25

Koninklijke Ahold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Koninklijke Ahold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AHOLD DELHAIADR16

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AHOLD DELHAIADR16 EO 25 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AHOLD DELHAIADR16 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Koninklijke Ahold and AHOLD DELHAIADR16

The main advantage of trading using opposite Koninklijke Ahold and AHOLD DELHAIADR16 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Ahold position performs unexpectedly, AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 will offset losses from the drop in AHOLD DELHAIADR16's long position.

The idea behind Koninklijke Ahold Delhaize and AHOLD DELHAIADR16 EO 25 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.