Correlation Between Solvay SA and KBC Ancora

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

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

Diversification Opportunities for Solvay SA and KBC Ancora

0.9

Correlation Coefficient

Solvay SA  KBC Ancora

Almost no diversification

The 3 months correlation between Solvay and KBC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and KBC Ancora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Ancora and Solvay SA 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 Solvay SA are associated (or correlated) with KBC Ancora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Ancora has no effect on the direction of Solvay SA i.e., Solvay SA and KBC Ancora go up and down completely randomly.

Pair Corralation between Solvay SA and KBC Ancora

Assuming the 90 days trading horizon Solvay SA is expected to generate 1.65 times more return on investment than KBC Ancora. However, Solvay SA is 1.65 times more volatile than KBC Ancora. It trades about 0.09 of its potential returns per unit of risk. KBC Ancora is currently generating about 0.15 per unit of risk. If you would invest  2,989  in Solvay SA on December 28, 2024 and sell it today you would earn a total of  350.00  from holding Solvay SA or generate 11.71% return on investment over 90 days.

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

Solvay SA  vs.  KBC Ancora

Solvay SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solvay SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Solvay SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KBC Ancora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, KBC Ancora may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Solvay SA and KBC Ancora

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

The idea behind Solvay SA and KBC Ancora 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.