Correlation Between Solvay SA and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Solvay SA 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 Solvay SA and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and KBC Groep NV, you can compare the effects of market volatilities on Solvay SA 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 Solvay SA with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and KBC Groep.
Diversification Opportunities for Solvay SA and KBC Groep
Very good diversification
The 3 months correlation between Solvay and KBC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA 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 Solvay SA 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 Solvay SA 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 Solvay SA i.e., Solvay SA and KBC Groep go up and down completely randomly.
Pair Corralation between Solvay SA and KBC Groep
Assuming the 90 days trading horizon Solvay SA is expected to under-perform the KBC Groep. In addition to that, Solvay SA is 1.42 times more volatile than KBC Groep NV. It trades about -0.03 of its total potential returns per unit of risk. KBC Groep NV is currently generating about 0.03 per unit of volatility. If you would invest 6,689 in KBC Groep NV on August 23, 2024 and sell it today you would earn a total of 263.00 from holding KBC Groep NV or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA vs. KBC Groep NV
Performance |
| Timeline |
| Solvay SA |
| KBC Groep NV |
Solvay SA and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and KBC Groep
The main advantage of trading using opposite Solvay SA and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA 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.| Solvay SA vs. Anheuser Busch Inbev | Solvay SA vs. Argen X | Solvay SA vs. UCB SA | Solvay SA vs. Groep Brussel Lambert |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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