Correlation Between Sofina Socit and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Sofina Socit 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 Sofina Socit and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sofina Socit Anonyme and KBC Groep NV, you can compare the effects of market volatilities on Sofina Socit 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 Sofina Socit with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and KBC Groep.
Diversification Opportunities for Sofina Socit and KBC Groep
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sofina and KBC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme 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 Sofina Socit 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 Sofina Socit Anonyme 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 Sofina Socit i.e., Sofina Socit and KBC Groep go up and down completely randomly.
Pair Corralation between Sofina Socit and KBC Groep
Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to under-perform the KBC Groep. But the stock apears to be less risky and, when comparing its historical volatility, Sofina Socit Anonyme is 1.23 times less risky than KBC Groep. The stock trades about -0.24 of its potential returns per unit of risk. The KBC Groep NV is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,682 in KBC Groep NV on August 24, 2024 and sell it today you would earn a total of 274.00 from holding KBC Groep NV or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sofina Socit Anonyme vs. KBC Groep NV
Performance |
| Timeline |
| Sofina Socit Anonyme |
| KBC Groep NV |
Sofina Socit and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sofina Socit and KBC Groep
The main advantage of trading using opposite Sofina Socit and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sofina Socit 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.| Sofina Socit vs. Retail Estates | Sofina Socit vs. Shurgard Self Storage | Sofina Socit vs. Immolease Trust NV | Sofina Socit vs. Ion Beam Applications |
| KBC Groep vs. ageas SANV | KBC Groep vs. Solvay SA | KBC Groep vs. Etablissementen Franz Colruyt | KBC Groep vs. Groep Brussel Lambert |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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