Correlation Between Warehouses and Koninklijke Heijmans

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

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

Diversification Opportunities for Warehouses and Koninklijke Heijmans

-0.68

Correlation Coefficient

Warehouses  Koninklijke Heijmans

Excellent diversification

The 3 months correlation between Warehouses and Koninklijke is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Warehouses de Pauw and Koninklijke Heijmans NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Heijmans and Warehouses 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 Warehouses de Pauw are associated (or correlated) with Koninklijke Heijmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Heijmans has no effect on the direction of Warehouses i.e., Warehouses and Koninklijke Heijmans go up and down completely randomly.

Pair Corralation between Warehouses and Koninklijke Heijmans

Assuming the 90 days trading horizon Warehouses de Pauw is expected to under-perform the Koninklijke Heijmans. But the stock apears to be less risky and, when comparing its historical volatility, Warehouses de Pauw is 1.79 times less risky than Koninklijke Heijmans. The stock trades about -0.25 of its potential returns per unit of risk. The Koninklijke Heijmans NV is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,465  in Koninklijke Heijmans NV on September 19, 2024 and sell it today you would earn a total of  635.00  from holding Koninklijke Heijmans NV or generate 25.76% return on investment over 90 days.

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

Warehouses de Pauw  vs.  Koninklijke Heijmans NV

Warehouses de Pauw

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warehouses de Pauw has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Koninklijke Heijmans

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Heijmans NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koninklijke Heijmans sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Warehouses and Koninklijke Heijmans

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

The idea behind Warehouses de Pauw and Koninklijke Heijmans 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.