Correlation Between Etablissementen Franz and KBC Groep

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

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

Diversification Opportunities for Etablissementen Franz and KBC Groep

0.01

Correlation Coefficient

Etablissementen Franz  KBC Groep

Significant diversification

The 3 months correlation between Etablissementen and KBC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Etablissementen Franz Colruyt and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and Etablissementen Franz 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 Etablissementen Franz Colruyt are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Etablissementen Franz i.e., Etablissementen Franz and KBC Groep go up and down completely randomly.

Pair Corralation between Etablissementen Franz and KBC Groep

Assuming the 90 days trading horizon Etablissementen Franz Colruyt is expected to under-perform the KBC Groep. In addition to that, Etablissementen Franz is 1.17 times more volatile than KBC Groep NV. It trades about -0.09 of its total potential returns per unit of risk. KBC Groep NV is currently generating about 0.03 per unit of volatility. If you would invest  6,676  in KBC Groep NV on September 3, 2024 and sell it today you would earn a total of  148.00  from holding KBC Groep NV or generate 2.22% return on investment over 90 days.

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

Etablissementen Franz Colruyt  vs.  KBC Groep NV

Etablissementen Franz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etablissementen Franz Colruyt has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

KBC Groep NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Groep NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, KBC Groep is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Etablissementen Franz and KBC Groep

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

The idea behind Etablissementen Franz Colruyt and KBC Groep 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..