Correlation Between TKH Group and NV Nederlandsche

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

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

Diversification Opportunities for TKH Group and NV Nederlandsche

0.75

Correlation Coefficient

TKH Group  NV Nederlandsche

Poor diversification

The 3 months correlation between TKH and NEDAP is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and NV Nederlandsche Apparatenfabr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Nederlandsche App and TKH Group 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 TKH Group NV are associated (or correlated) with NV Nederlandsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Nederlandsche App has no effect on the direction of TKH Group i.e., TKH Group and NV Nederlandsche go up and down completely randomly.

Pair Corralation between TKH Group and NV Nederlandsche

Assuming the 90 days trading horizon TKH Group is expected to generate 1.77 times less return on investment than NV Nederlandsche. But when comparing it to its historical volatility, TKH Group NV is 1.38 times less risky than NV Nederlandsche. It trades about 0.2 of its potential returns per unit of risk. NV Nederlandsche Apparatenfabriek is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,100  in NV Nederlandsche Apparatenfabriek on April 20, 2025 and sell it today you would earn a total of  1,980  from holding NV Nederlandsche Apparatenfabriek or generate 32.46% return on investment over 90 days.

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

TKH Group NV  vs.  NV Nederlandsche Apparatenfabr

TKH Group NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TKH Group NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TKH Group sustained solid returns over the last few months and may actually be approaching a breakup point.

NV Nederlandsche App

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NV Nederlandsche Apparatenfabriek are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NV Nederlandsche sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TKH Group and NV Nederlandsche

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

The idea behind TKH Group NV and NV Nederlandsche Apparatenfabriek 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.