Correlation Between Absa Group and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Absa Group and KBC Groep 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 Absa Group and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and KBC Groep NV, you can compare the effects of market volatilities on Absa Group and KBC Groep 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 Absa Group with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and KBC Groep.
Diversification Opportunities for Absa Group and KBC Groep
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Absa and KBC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV and Absa 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 Absa Group Limited are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Absa Group i.e., Absa Group and KBC Groep go up and down completely randomly.
Pair Corralation between Absa Group and KBC Groep
If you would invest 811.00 in Absa Group Limited on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Absa Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. KBC Groep NV
Performance |
| Timeline |
| Absa Group Limited |
| KBC Groep NV |
Absa Group and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and KBC Groep
The main advantage of trading using opposite Absa Group and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, KBC Groep 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 Groep will offset losses from the drop in KBC Groep's long position.| Absa Group vs. Piraeus Bank SA | Absa Group vs. Turkiye Garanti Bankasi | Absa Group vs. Uwharrie Capital Corp |
| KBC Groep vs. Piraeus Bank SA | KBC Groep vs. Turkiye Garanti Bankasi | KBC Groep vs. Uwharrie Capital Corp |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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