Correlation Between Solvay SA and Kinepolis Group
Can any of the company-specific risk be diversified away by investing in both Solvay SA and Kinepolis Group 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 Kinepolis Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA and Kinepolis Group NV, you can compare the effects of market volatilities on Solvay SA and Kinepolis Group 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 Kinepolis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Kinepolis Group.
Diversification Opportunities for Solvay SA and Kinepolis Group
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solvay and Kinepolis is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA and Kinepolis Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinepolis Group 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 Kinepolis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinepolis Group NV has no effect on the direction of Solvay SA i.e., Solvay SA and Kinepolis Group go up and down completely randomly.
Pair Corralation between Solvay SA and Kinepolis Group
Assuming the 90 days trading horizon Solvay SA is expected to generate 0.64 times more return on investment than Kinepolis Group. However, Solvay SA is 1.57 times less risky than Kinepolis Group. It trades about -0.04 of its potential returns per unit of risk. Kinepolis Group NV is currently generating about -0.05 per unit of risk. If you would invest 2,994 in Solvay SA on November 4, 2024 and sell it today you would lose (40.00) from holding Solvay SA or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA vs. Kinepolis Group NV
Performance |
| Timeline |
| Solvay SA |
| Kinepolis Group NV |
Solvay SA and Kinepolis Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Kinepolis Group
The main advantage of trading using opposite Solvay SA and Kinepolis Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA position performs unexpectedly, Kinepolis Group 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 Kinepolis Group will offset losses from the drop in Kinepolis Group's long position.The idea behind Solvay SA and Kinepolis Group NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kinepolis Group vs. Vastned Retail Belgium | Kinepolis Group vs. Home Invest Belgium | Kinepolis Group vs. Shurgard Self Storage | Kinepolis Group vs. EVS Broadcast Equipment |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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