Correlation Between KBC Groep and Nedbank
Can any of the company-specific risk be diversified away by investing in both KBC Groep and Nedbank 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 Nedbank 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 Nedbank Group, you can compare the effects of market volatilities on KBC Groep and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and Nedbank.
Diversification Opportunities for KBC Groep and Nedbank
Excellent diversification
The 3 months correlation between KBC and Nedbank is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of KBC Groep i.e., KBC Groep and Nedbank go up and down completely randomly.
Pair Corralation between KBC Groep and Nedbank
Assuming the 90 days horizon KBC Groep NV is expected to generate 0.84 times more return on investment than Nedbank. However, KBC Groep NV is 1.19 times less risky than Nedbank. It trades about 0.06 of its potential returns per unit of risk. Nedbank Group is currently generating about 0.04 per unit of risk. If you would invest 3,801 in KBC Groep NV on November 2, 2024 and sell it today you would earn a total of 74.00 from holding KBC Groep NV or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBC Groep NV vs. Nedbank Group
Performance |
| Timeline |
| KBC Groep NV |
| Nedbank Group |
KBC Groep and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBC Groep and Nedbank
The main advantage of trading using opposite KBC Groep and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
| Nedbank vs. Standard Bank Group | Nedbank vs. Sanlam Ltd PK | Nedbank vs. Absa Group Ltd | Nedbank vs. Bank Mandiri Persero |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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