Correlation Between Rotork Plc and Aalberts

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

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

Diversification Opportunities for Rotork Plc and Aalberts

-0.04

Correlation Coefficient

Rotork Plc  Aalberts

Good diversification

The 3 months correlation between Rotork and Aalberts is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Rotork plc and Aalberts NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts NV and Rotork Plc 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 Rotork plc are associated (or correlated) with Aalberts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts NV has no effect on the direction of Rotork Plc i.e., Rotork Plc and Aalberts go up and down completely randomly.

Pair Corralation between Rotork Plc and Aalberts

Assuming the 90 days horizon Rotork plc is expected to generate 1.27 times more return on investment than Aalberts. However, Rotork Plc is 1.27 times more volatile than Aalberts NV. It trades about -0.03 of its potential returns per unit of risk. Aalberts NV is currently generating about -0.09 per unit of risk. If you would invest  464.00  in Rotork plc on August 20, 2025 and sell it today you would lose (29.00) from holding Rotork plc or give up 6.25% of portfolio value over 90 days.

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

Rotork plc  vs.  Aalberts NV

Rotork plc

Risk-Adjusted Performance

Weakest

Over the last 90 days Rotork plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rotork Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aalberts NV

Risk-Adjusted Performance

Weakest

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

Pair Trading with Rotork Plc and Aalberts

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

The idea behind Rotork plc and Aalberts 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.