Correlation Between Koninklijke Philips and AtriCure

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

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

Diversification Opportunities for Koninklijke Philips and AtriCure

-0.83

Correlation Coefficient

Koninklijke Philips  AtriCure

Pay attention - limited upside

The 3 months correlation between Koninklijke and AtriCure is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and AtriCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AtriCure and Koninklijke Philips 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 Philips NV are associated (or correlated) with AtriCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AtriCure has no effect on the direction of Koninklijke Philips i.e., Koninklijke Philips and AtriCure go up and down completely randomly.

Pair Corralation between Koninklijke Philips and AtriCure

Considering the 90-day investment horizon Koninklijke Philips NV is expected to under-perform the AtriCure. But the stock apears to be less risky and, when comparing its historical volatility, Koninklijke Philips NV is 1.25 times less risky than AtriCure. The stock trades about -0.05 of its potential returns per unit of risk. The AtriCure is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,621  in AtriCure on August 30, 2024 and sell it today you would earn a total of  996.00  from holding AtriCure or generate 38.0% return on investment over 90 days.

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

Koninklijke Philips NV  vs.  AtriCure

Koninklijke Philips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Philips NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AtriCure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AtriCure are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, AtriCure exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koninklijke Philips and AtriCure

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

The idea behind Koninklijke Philips NV and AtriCure 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.