Correlation Between Anheuser Busch and KBC Ancora

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

By analyzing existing cross correlation between Anheuser Busch Inbev and KBC Ancora, you can compare the effects of market volatilities on Anheuser Busch and KBC Ancora 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 Ancora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and KBC Ancora.

Diversification Opportunities for Anheuser Busch and KBC Ancora

0.36

Correlation Coefficient

Anheuser Busch  KBC Ancora

Weak diversification

The 3 months correlation between Anheuser and KBC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and KBC Ancora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Ancora 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 are associated (or correlated) with KBC Ancora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Ancora has no effect on the direction of Anheuser Busch i.e., Anheuser Busch and KBC Ancora go up and down completely randomly.

Pair Corralation between Anheuser Busch and KBC Ancora

Assuming the 90 days trading horizon Anheuser Busch Inbev is expected to generate 1.66 times more return on investment than KBC Ancora. However, Anheuser Busch is 1.66 times more volatile than KBC Ancora. It trades about 0.15 of its potential returns per unit of risk. KBC Ancora is currently generating about 0.21 per unit of risk. If you would invest  5,048  in Anheuser Busch Inbev on December 5, 2024 and sell it today you would earn a total of  802.00  from holding Anheuser Busch Inbev or generate 15.89% return on investment over 90 days.

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

Anheuser Busch Inbev  vs.  KBC Ancora

Anheuser Busch Inbev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch Inbev are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

KBC Ancora

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, KBC Ancora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anheuser Busch and KBC Ancora

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

The idea behind Anheuser Busch Inbev and KBC Ancora 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 Anywhere module to track or share privately all of your investments from the convenience of any device.