Correlation Between IMCD NV and Koninklijke Philips

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

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

Diversification Opportunities for IMCD NV and Koninklijke Philips

0.45

Correlation Coefficient

IMCD NV  Koninklijke Philips

Very weak diversification

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

Pair Corralation between IMCD NV and Koninklijke Philips

Assuming the 90 days trading horizon IMCD NV is expected to under-perform the Koninklijke Philips. In addition to that, IMCD NV is 1.27 times more volatile than Koninklijke Philips NV. It trades about -0.03 of its total potential returns per unit of risk. Koninklijke Philips NV is currently generating about 0.04 per unit of volatility. If you would invest  2,034  in Koninklijke Philips NV on April 22, 2025 and sell it today you would earn a total of  74.00  from holding Koninklijke Philips NV or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

IMCD NV  vs.  Koninklijke Philips NV

IMCD NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days IMCD NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IMCD NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Koninklijke Philips

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Philips NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koninklijke Philips is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IMCD NV and Koninklijke Philips

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

The idea behind IMCD NV and Koninklijke Philips 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.