Correlation Between KBC Group and PPHE HOTEL

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

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

Diversification Opportunities for KBC Group and PPHE HOTEL

-0.21

Correlation Coefficient

KBC Group  PPHE HOTEL

Very good diversification

The 3 months correlation between KBC and PPHE is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding KBC Group NV and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and KBC Group 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 Group NV are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of KBC Group i.e., KBC Group and PPHE HOTEL go up and down completely randomly.

Pair Corralation between KBC Group and PPHE HOTEL

Assuming the 90 days horizon KBC Group NV is expected to generate 0.83 times more return on investment than PPHE HOTEL. However, KBC Group NV is 1.2 times less risky than PPHE HOTEL. It trades about 0.17 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.04 per unit of risk. If you would invest  7,344  in KBC Group NV on December 19, 2024 and sell it today you would earn a total of  1,056  from holding KBC Group NV or generate 14.38% return on investment over 90 days.

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

KBC Group NV  vs.  PPHE HOTEL GROUP

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 13 (%) 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.

PPHE HOTEL GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days PPHE HOTEL GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PPHE HOTEL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KBC Group and PPHE HOTEL

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

The idea behind KBC Group NV and PPHE HOTEL GROUP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.