Correlation Between Standard Bank and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Standard Bank 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 Standard Bank and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and KBC Groep NV, you can compare the effects of market volatilities on Standard Bank 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 Standard Bank with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and KBC Groep.
Diversification Opportunities for Standard Bank and KBC Groep
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Standard and KBC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group 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 Standard Bank 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 Standard Bank Group 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 Standard Bank i.e., Standard Bank and KBC Groep go up and down completely randomly.
Pair Corralation between Standard Bank and KBC Groep
Assuming the 90 days horizon Standard Bank Group is expected to under-perform the KBC Groep. But the pink sheet apears to be less risky and, when comparing its historical volatility, Standard Bank Group is 1.02 times less risky than KBC Groep. The pink sheet trades about -0.09 of its potential returns per unit of risk. The KBC Groep NV is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,609 in KBC Groep NV on August 30, 2024 and sell it today you would lose (49.00) from holding KBC Groep NV or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. KBC Groep NV
Performance |
| Timeline |
| Standard Bank Group |
| KBC Groep NV |
Standard Bank and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and KBC Groep
The main advantage of trading using opposite Standard Bank and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank 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.| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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