Correlation Between Koninklijke BAM and Randstad

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

Diversification Opportunities for Koninklijke BAM and Randstad

0.57

Correlation Coefficient

Koninklijke BAM  Randstad

Very weak diversification

The 3 months correlation between Koninklijke and Randstad is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke BAM Groep and Randstad NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad NV 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 Randstad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad NV has no effect on the direction of Koninklijke BAM i.e., Koninklijke BAM and Randstad go up and down completely randomly.

Pair Corralation between Koninklijke BAM and Randstad

Assuming the 90 days trading horizon Koninklijke BAM Groep is expected to generate 1.98 times more return on investment than Randstad. However, Koninklijke BAM is 1.98 times more volatile than Randstad NV. It trades about 0.12 of its potential returns per unit of risk. Randstad NV is currently generating about -0.15 per unit of risk. If you would invest  417.00  in Koninklijke BAM Groep on September 19, 2024 and sell it today you would earn a total of  23.00  from holding Koninklijke BAM Groep or generate 5.52% 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.  Randstad NV

Koninklijke BAM Groep

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke BAM Groep are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Koninklijke BAM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Randstad NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randstad NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Randstad is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Koninklijke BAM and Randstad

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

The idea behind Koninklijke BAM Groep and Randstad NV 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.