Correlation Between Holland Colours and TKH Group
Can any of the company-specific risk be diversified away by investing in both Holland Colours and TKH Group 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 Holland Colours and TKH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holland Colours NV and TKH Group NV, you can compare the effects of market volatilities on Holland Colours and TKH Group 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 Holland Colours with a short position of TKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holland Colours and TKH Group.
Diversification Opportunities for Holland Colours and TKH Group
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Holland and TKH is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Holland Colours NV and TKH Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKH Group NV and Holland Colours 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 Holland Colours NV are associated (or correlated) with TKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKH Group NV has no effect on the direction of Holland Colours i.e., Holland Colours and TKH Group go up and down completely randomly.
Pair Corralation between Holland Colours and TKH Group
Assuming the 90 days trading horizon Holland Colours is expected to generate 1.48 times less return on investment than TKH Group. In addition to that, Holland Colours is 2.26 times more volatile than TKH Group NV. It trades about 0.07 of its total potential returns per unit of risk. TKH Group NV is currently generating about 0.24 per unit of volatility. If you would invest 3,714 in TKH Group NV on February 8, 2024 and sell it today you would earn a total of 446.00 from holding TKH Group NV or generate 12.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Holland Colours NV vs. TKH Group NV
Performance |
Timeline |
Holland Colours NV |
TKH Group NV |
Holland Colours and TKH Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Holland Colours and TKH Group
The main advantage of trading using opposite Holland Colours and TKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holland Colours position performs unexpectedly, TKH Group 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 TKH Group will offset losses from the drop in TKH Group's long position.Holland Colours vs. BE Semiconductor Industries | Holland Colours vs. TKH Group NV | Holland Colours vs. Aalberts Industries NV | Holland Colours vs. ASM International NV |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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