Correlation Between Koninklijke BAM and NN Group

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

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

Diversification Opportunities for Koninklijke BAM and NN Group

0.93

Correlation Coefficient

Koninklijke BAM  NN Group

Almost no diversification

The 3 months correlation between Koninklijke and NN Group is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke BAM Groep and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Koninklijke BAM 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 BAM Groep are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Koninklijke BAM i.e., Koninklijke BAM and NN Group go up and down completely randomly.

Pair Corralation between Koninklijke BAM and NN Group

Assuming the 90 days trading horizon Koninklijke BAM Groep is expected to generate 2.23 times more return on investment than NN Group. However, Koninklijke BAM is 2.23 times more volatile than NN Group NV. It trades about 0.34 of its potential returns per unit of risk. NN Group NV is currently generating about 0.28 per unit of risk. If you would invest  526.00  in Koninklijke BAM Groep on April 25, 2025 and sell it today you would earn a total of  218.00  from holding Koninklijke BAM Groep or generate 41.44% return on investment over 90 days.

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

Koninklijke BAM Groep  vs.  NN Group NV

Koninklijke BAM Groep

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke BAM Groep are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Koninklijke BAM sustained solid returns over the last few months and may actually be approaching a breakup point.

NN Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NN Group NV are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NN Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Koninklijke BAM and NN Group

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

The idea behind Koninklijke BAM Groep and NN Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.