Correlation Between Charter Communications and KBC Group

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

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

Diversification Opportunities for Charter Communications and KBC Group

-0.09

Correlation Coefficient

Charter Communications  KBC Group

Good diversification

The 3 months correlation between Charter and KBC is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and KBC Group go up and down completely randomly.

Pair Corralation between Charter Communications and KBC Group

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the KBC Group. In addition to that, Charter Communications is 1.11 times more volatile than KBC Group NV. It trades about -0.03 of its total potential returns per unit of risk. KBC Group NV is currently generating about 0.21 per unit of volatility. If you would invest  7,308  in KBC Group NV on December 21, 2024 and sell it today you would earn a total of  1,420  from holding KBC Group NV or generate 19.43% return on investment over 90 days.

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

Charter Communications  vs.  KBC Group NV

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Charter Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

KBC Group NV

Risk-Adjusted Performance

Good

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

Pair Trading with Charter Communications and KBC Group

The main advantage of trading using opposite Charter Communications and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.