Correlation Between Koninklijke BAM and Klepierre

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

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

Diversification Opportunities for Koninklijke BAM and Klepierre

0.43

Correlation Coefficient

Koninklijke BAM  Klepierre

Very weak diversification

The 3 months correlation between Koninklijke and Klepierre is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke BAM Groep and Klepierre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klepierre SA and Koninklijke BAM 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 BAM Groep are associated (or correlated) with Klepierre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klepierre SA has no effect on the direction of Koninklijke BAM i.e., Koninklijke BAM and Klepierre go up and down completely randomly.

Pair Corralation between Koninklijke BAM and Klepierre

Assuming the 90 days trading horizon Koninklijke BAM Groep is expected to generate 2.23 times more return on investment than Klepierre. However, Koninklijke BAM is 2.23 times more volatile than Klepierre SA. It trades about 0.12 of its potential returns per unit of risk. Klepierre SA is currently generating about -0.08 per unit of risk. If you would invest  380.00  in Koninklijke BAM Groep on September 20, 2024 and sell it today you would earn a total of  60.00  from holding Koninklijke BAM Groep or generate 15.79% return on investment over 90 days.

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

Koninklijke BAM Groep  vs.  Klepierre SA

Koninklijke BAM Groep

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke BAM Groep are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Koninklijke BAM sustained solid returns over the last few months and may actually be approaching a breakup point.

Klepierre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klepierre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Klepierre is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koninklijke BAM and Klepierre

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

The idea behind Koninklijke BAM Groep and Klepierre 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.