Correlation Between SYSTEMAIR and KBC GR

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

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

Diversification Opportunities for SYSTEMAIR and KBC GR

-0.27

Correlation Coefficient

SYSTEMAIR  KBC GR

Very good diversification

The 3 months correlation between SYSTEMAIR and KBC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and KBC GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC GR and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with KBC GR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC GR has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and KBC GR go up and down completely randomly.

Pair Corralation between SYSTEMAIR and KBC GR

Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the KBC GR. In addition to that, SYSTEMAIR is 1.39 times more volatile than KBC GR. It trades about -0.02 of its total potential returns per unit of risk. KBC GR is currently generating about 0.21 per unit of volatility. If you would invest  7,326  in KBC GR on December 20, 2024 and sell it today you would earn a total of  1,412  from holding KBC GR or generate 19.27% return on investment over 90 days.

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

SYSTEMAIR AB  vs.  KBC GR

SYSTEMAIR AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSTEMAIR AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SYSTEMAIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KBC GR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC GR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, KBC GR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SYSTEMAIR and KBC GR

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

The idea behind SYSTEMAIR AB and KBC GR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.