Correlation Between Alfen Beheer and RENEWI

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

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

Diversification Opportunities for Alfen Beheer and RENEWI

0.45

Correlation Coefficient

Alfen Beheer  RENEWI

Very weak diversification

The 3 months correlation between Alfen and RENEWI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alfen Beheer BV and RENEWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENEWI and Alfen Beheer 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 Alfen Beheer BV are associated (or correlated) with RENEWI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENEWI has no effect on the direction of Alfen Beheer i.e., Alfen Beheer and RENEWI go up and down completely randomly.

Pair Corralation between Alfen Beheer and RENEWI

Assuming the 90 days trading horizon Alfen Beheer BV is expected to under-perform the RENEWI. But the stock apears to be less risky and, when comparing its historical volatility, Alfen Beheer BV is 28.94 times less risky than RENEWI. The stock trades about -0.04 of its potential returns per unit of risk. The RENEWI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  25.00  in RENEWI on April 20, 2025 and sell it today you would lose (5.00) from holding RENEWI or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Alfen Beheer BV  vs.  RENEWI

Alfen Beheer BV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfen Beheer BV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RENEWI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RENEWI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, RENEWI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfen Beheer and RENEWI

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

The idea behind Alfen Beheer BV and RENEWI 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.