Correlation Between Fastned BV and Aalberts Industries

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

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

Diversification Opportunities for Fastned BV and Aalberts Industries

-0.12

Correlation Coefficient

Fastned BV  Aalberts Industries

Good diversification

The 3 months correlation between Fastned and Aalberts is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fastned BV and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries and Fastned BV 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 Fastned BV are associated (or correlated) with Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of Fastned BV i.e., Fastned BV and Aalberts Industries go up and down completely randomly.

Pair Corralation between Fastned BV and Aalberts Industries

Assuming the 90 days trading horizon Fastned BV is expected to generate 0.86 times more return on investment than Aalberts Industries. However, Fastned BV is 1.17 times less risky than Aalberts Industries. It trades about 0.01 of its potential returns per unit of risk. Aalberts Industries NV is currently generating about -0.04 per unit of risk. If you would invest  2,160  in Fastned BV on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Fastned BV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Fastned BV  vs.  Aalberts Industries NV

Fastned BV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastned BV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fastned BV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aalberts Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aalberts Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aalberts Industries 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 Fastned BV and Aalberts Industries

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

The idea behind Fastned BV and Aalberts Industries 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.