Correlation Between KBC Groep and First Hawaiian

Can any of the company-specific risk be diversified away by investing in both KBC Groep and First Hawaiian 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 First Hawaiian 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 First Hawaiian, you can compare the effects of market volatilities on KBC Groep and First Hawaiian 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 First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and First Hawaiian.

Diversification Opportunities for KBC Groep and First Hawaiian

0.08

Correlation Coefficient

KBC Groep  First Hawaiian

Significant diversification

The 3 months correlation between KBC and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian 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 First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of KBC Groep i.e., KBC Groep and First Hawaiian go up and down completely randomly.

Pair Corralation between KBC Groep and First Hawaiian

Assuming the 90 days horizon KBC Groep NV is expected to generate 1.05 times more return on investment than First Hawaiian. However, KBC Groep is 1.05 times more volatile than First Hawaiian. It trades about 0.2 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.0 per unit of risk. If you would invest  3,611  in KBC Groep NV on December 2, 2024 and sell it today you would earn a total of  694.00  from holding KBC Groep NV or generate 19.22% 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.  First Hawaiian

KBC Groep NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Groep NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, KBC Groep showed solid returns over the last few months and may actually be approaching a breakup point.

First Hawaiian

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Hawaiian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, First Hawaiian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KBC Groep and First Hawaiian

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

The idea behind KBC Groep NV and First Hawaiian 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.