Correlation Between KBC Groep and GIMV NV

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

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

Diversification Opportunities for KBC Groep and GIMV NV

0.15

Correlation Coefficient

KBC Groep  GIMV NV

Average diversification

The 3 months correlation between KBC and GIMV is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and GIMV NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIMV NV and KBC Groep 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 KBC Groep NV are associated (or correlated) with GIMV NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIMV NV has no effect on the direction of KBC Groep i.e., KBC Groep and GIMV NV go up and down completely randomly.

Pair Corralation between KBC Groep and GIMV NV

Assuming the 90 days trading horizon KBC Groep is expected to generate 3.25 times less return on investment than GIMV NV. But when comparing it to its historical volatility, KBC Groep NV is 1.61 times less risky than GIMV NV. It trades about 0.08 of its potential returns per unit of risk. GIMV NV is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,745  in GIMV NV on September 17, 2024 and sell it today you would earn a total of  235.00  from holding GIMV NV or generate 6.28% return on investment over 90 days.

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

KBC Groep NV  vs.  GIMV NV

KBC Groep NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Groep NV are ranked lower than 5 (%) 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.

GIMV NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIMV NV 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.

Pair Trading with KBC Groep and GIMV NV

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

The idea behind KBC Groep NV and GIMV 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.