Correlation Between VEON and ABN Amro

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

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

Diversification Opportunities for VEON and ABN Amro

0.58

Correlation Coefficient

VEON  ABN Amro

Very weak diversification

The 3 months correlation between VEON and ABN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding VEON and ABN Amro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN Amro Group and VEON 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 VEON are associated (or correlated) with ABN Amro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN Amro Group has no effect on the direction of VEON i.e., VEON and ABN Amro go up and down completely randomly.

Pair Corralation between VEON and ABN Amro

Assuming the 90 days trading horizon VEON is expected to generate 0.94 times more return on investment than ABN Amro. However, VEON is 1.06 times less risky than ABN Amro. It trades about -0.13 of its potential returns per unit of risk. ABN Amro Group is currently generating about -0.12 per unit of risk. If you would invest  89.00  in VEON on January 30, 2024 and sell it today you would lose (4.00) from holding VEON or give up 4.49% of portfolio value over 90 days.

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

VEON  vs.  ABN Amro Group

VEON

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VEON are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VEON unveiled solid returns over the last few months and may actually be approaching a breakup point.

ABN Amro Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABN Amro Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ABN Amro may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with VEON and ABN Amro

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

The idea behind VEON and ABN Amro Group 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.