Correlation Between Anheuser Busch and KBC Group

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

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

Diversification Opportunities for Anheuser Busch and KBC Group

-0.81

Correlation Coefficient

Anheuser Busch  KBC Group

Pay attention - limited upside

The 3 months correlation between Anheuser and KBC is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV and KBC Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Group NV and Anheuser Busch 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 Anheuser Busch InBev SANV are associated (or correlated) with KBC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Group NV has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and KBC Group go up and down completely randomly.

Pair Corralation between Anheuser Busch and KBC Group

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to under-perform the KBC Group. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch InBev SANV is 1.04 times less risky than KBC Group. The stock trades about -0.07 of its potential returns per unit of risk. The KBC Group NV is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,946  in KBC Group NV on October 22, 2024 and sell it today you would earn a total of  1,348  from holding KBC Group NV or generate 22.67% return on investment over 90 days.

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

Anheuser Busch InBev SANV  vs.  KBC Group NV

Anheuser Busch InBev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch InBev SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KBC Group NV

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Group NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KBC Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Anheuser Busch and KBC Group

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

The idea behind Anheuser Busch InBev SANV and KBC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.