Correlation Between Kinepolis Group and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Kinepolis Group and Solvay SA 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 Kinepolis Group and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinepolis Group NV and Solvay SA, you can compare the effects of market volatilities on Kinepolis Group and Solvay SA 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 Kinepolis Group with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinepolis Group and Solvay SA.
Diversification Opportunities for Kinepolis Group and Solvay SA
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kinepolis and Solvay is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kinepolis Group NV and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Kinepolis 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 Kinepolis Group NV are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Kinepolis Group i.e., Kinepolis Group and Solvay SA go up and down completely randomly.
Pair Corralation between Kinepolis Group and Solvay SA
Assuming the 90 days trading horizon Kinepolis Group is expected to generate 9.6 times less return on investment than Solvay SA. But when comparing it to its historical volatility, Kinepolis Group NV is 1.23 times less risky than Solvay SA. It trades about 0.01 of its potential returns per unit of risk. Solvay SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,419 in Solvay SA on August 27, 2024 and sell it today you would earn a total of 1,706 from holding Solvay SA or generate 120.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinepolis Group NV vs. Solvay SA
Performance |
| Timeline |
| Kinepolis Group NV |
| Solvay SA |
Kinepolis Group and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinepolis Group and Solvay SA
The main advantage of trading using opposite Kinepolis Group and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinepolis Group position performs unexpectedly, Solvay SA 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Kinepolis Group vs. Retail Estates | Kinepolis Group vs. Onward Medical NV | Kinepolis Group vs. Home Invest Belgium | Kinepolis Group vs. EVS Broadcast Equipment |
| Solvay SA vs. Onward Medical NV | Solvay SA vs. Shurgard Self Storage | Solvay SA vs. Immolease Trust NV | Solvay SA vs. Home Invest Belgium |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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