Correlation Between ABN Amro and Basic Fit

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

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

Diversification Opportunities for ABN Amro and Basic Fit

0.94

Correlation Coefficient

ABN Amro  Basic Fit

Almost no diversification

The 3 months correlation between ABN and Basic is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ABN Amro Group and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit NV and ABN Amro 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 ABN Amro Group are associated (or correlated) with Basic Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of ABN Amro i.e., ABN Amro and Basic Fit go up and down completely randomly.

Pair Corralation between ABN Amro and Basic Fit

Assuming the 90 days trading horizon ABN Amro Group is expected to generate 0.92 times more return on investment than Basic Fit. However, ABN Amro Group is 1.08 times less risky than Basic Fit. It trades about 0.37 of its potential returns per unit of risk. Basic Fit NV is currently generating about 0.33 per unit of risk. If you would invest  1,731  in ABN Amro Group on April 21, 2025 and sell it today you would earn a total of  686.00  from holding ABN Amro Group or generate 39.63% return on investment over 90 days.

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

ABN Amro Group  vs.  Basic Fit NV

ABN Amro Group

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ABN Amro Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ABN Amro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Basic Fit NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Fit NV are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Basic Fit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABN Amro and Basic Fit

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

The idea behind ABN Amro Group and Basic Fit 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.