Correlation Between KBC Groep and PT Bank
Can any of the company-specific risk be diversified away by investing in both KBC Groep and PT Bank 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 PT Bank 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 PT Bank Rakyat, you can compare the effects of market volatilities on KBC Groep and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and PT Bank.
Diversification Opportunities for KBC Groep and PT Bank
Very weak diversification
The 3 months correlation between KBC and BKRKF is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of KBC Groep i.e., KBC Groep and PT Bank go up and down completely randomly.
Pair Corralation between KBC Groep and PT Bank
Assuming the 90 days horizon KBC Groep is expected to generate 2.57 times less return on investment than PT Bank. But when comparing it to its historical volatility, KBC Groep NV is 5.91 times less risky than PT Bank. It trades about 0.13 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PT Bank Rakyat on September 12, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Rakyat or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBC Groep NV vs. PT Bank Rakyat
Performance |
| Timeline |
| KBC Groep NV |
| PT Bank Rakyat |
KBC Groep and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBC Groep and PT Bank
The main advantage of trading using opposite KBC Groep and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| KBC Groep vs. PT Bank Rakyat | KBC Groep vs. Morningstar Unconstrained Allocation | KBC Groep vs. Bondbloxx ETF Trust | KBC Groep vs. Spring Valley Acquisition |
| PT Bank vs. Morningstar Unconstrained Allocation | PT Bank vs. Bondbloxx ETF Trust | PT Bank vs. Spring Valley Acquisition | PT Bank vs. Bondbloxx ETF Trust |
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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