Correlation Between KBC Group and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both KBC Group and Skandinaviska Enskilda 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 Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on KBC Group and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Group and Skandinaviska Enskilda.
Diversification Opportunities for KBC Group and Skandinaviska Enskilda
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KBC and Skandinaviska is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding KBC Group NV and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of KBC Group i.e., KBC Group and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between KBC Group and Skandinaviska Enskilda
Assuming the 90 days horizon KBC Group NV is expected to generate 0.7 times more return on investment than Skandinaviska Enskilda. However, KBC Group NV is 1.43 times less risky than Skandinaviska Enskilda. It trades about 0.35 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.0 per unit of risk. If you would invest 6,850 in KBC Group NV on September 27, 2024 and sell it today you would earn a total of 458.00 from holding KBC Group NV or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBC Group NV vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| KBC Group NV |
| Skandinaviska Enskilda |
KBC Group and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBC Group and Skandinaviska Enskilda
The main advantage of trading using opposite KBC Group and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Group position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| KBC Group vs. SERI INDUSTRIAL EO | KBC Group vs. GALENA MINING LTD | KBC Group vs. Evolution Mining Limited | KBC Group vs. CHINA SOUTHN AIR H |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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