Correlation Between NV Nederlandsche and Sligro Food

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

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

Diversification Opportunities for NV Nederlandsche and Sligro Food

0.93

Correlation Coefficient

NV Nederlandsche  Sligro Food

Almost no diversification

The 3 months correlation between NEDAP and Sligro is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NV Nederlandsche Apparatenfabr and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group and NV Nederlandsche 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 NV Nederlandsche Apparatenfabriek are associated (or correlated) with Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of NV Nederlandsche i.e., NV Nederlandsche and Sligro Food go up and down completely randomly.

Pair Corralation between NV Nederlandsche and Sligro Food

Assuming the 90 days trading horizon NV Nederlandsche Apparatenfabriek is expected to generate 1.04 times more return on investment than Sligro Food. However, NV Nederlandsche is 1.04 times more volatile than Sligro Food Group. It trades about -0.07 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.27 per unit of risk. If you would invest  5,720  in NV Nederlandsche Apparatenfabriek on September 19, 2024 and sell it today you would lose (320.00) from holding NV Nederlandsche Apparatenfabriek or give up 5.59% of portfolio value over 90 days.

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

NV Nederlandsche Apparatenfabr  vs.  Sligro Food Group

NV Nederlandsche App

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NV Nederlandsche and Sligro Food

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

The idea behind NV Nederlandsche Apparatenfabriek and Sligro Food Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.