Correlation Between Arcadis NV and Reliant Holdings

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

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

Diversification Opportunities for Arcadis NV and Reliant Holdings

0.07

Correlation Coefficient

Arcadis NV  Reliant Holdings

Significant diversification

The 3 months correlation between Arcadis and Reliant is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and Reliant Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliant Holdings and Arcadis NV 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 Arcadis NV are associated (or correlated) with Reliant Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliant Holdings has no effect on the direction of Arcadis NV i.e., Arcadis NV and Reliant Holdings go up and down completely randomly.

Pair Corralation between Arcadis NV and Reliant Holdings

Assuming the 90 days horizon Arcadis NV is expected to under-perform the Reliant Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arcadis NV is 34.5 times less risky than Reliant Holdings. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Reliant Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4.41  in Reliant Holdings on September 14, 2024 and sell it today you would earn a total of  0.70  from holding Reliant Holdings or generate 15.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Arcadis NV  vs.  Reliant Holdings

Arcadis NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Reliant Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Reliant Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Reliant Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcadis NV and Reliant Holdings

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

The idea behind Arcadis NV and Reliant Holdings 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.