Correlation Between JAPAN AIRLINES and KBC Group

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

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

Diversification Opportunities for JAPAN AIRLINES and KBC Group

0.19

Correlation Coefficient

JAPAN AIRLINES  KBC Group

Average diversification

The 3 months correlation between JAPAN and KBC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and KBC Group go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and KBC Group

If you would invest  0.00  in KBC Group NV on October 24, 2024 and sell it today you would earn a total of  0.00  from holding KBC Group NV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.88%
Values	Daily Returns

JAPAN AIRLINES  vs.  KBC Group NV

JAPAN AIRLINES

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

KBC Group NV

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days KBC Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, KBC Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JAPAN AIRLINES and KBC Group

The main advantage of trading using opposite JAPAN AIRLINES and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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 JAPAN AIRLINES 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.