Correlation Between Bank of Hawaii and KBC Groep

Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii 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 Bank of Hawaii and KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Hawaii and KBC Groep NV, you can compare the effects of market volatilities on Bank of Hawaii 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 Bank of Hawaii with a short position of KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and KBC Groep.

Diversification Opportunities for Bank of Hawaii and KBC Groep

-0.54

Correlation Coefficient

Bank of Hawaii  KBC Groep

Excellent diversification

The 3 months correlation between Bank and KBC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii 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 Bank of Hawaii 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 Bank of Hawaii 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 Bank of Hawaii i.e., Bank of Hawaii and KBC Groep go up and down completely randomly.

Pair Corralation between Bank of Hawaii and KBC Groep

Considering the 90-day investment horizon Bank of Hawaii is expected to generate 1.46 times more return on investment than KBC Groep. However, Bank of Hawaii is 1.46 times more volatile than KBC Groep NV. It trades about 0.06 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.08 per unit of risk. If you would invest  6,223  in Bank of Hawaii on September 4, 2024 and sell it today you would earn a total of  1,604  from holding Bank of Hawaii or generate 25.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Bank of Hawaii  vs.  KBC Groep NV

Bank of Hawaii

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Hawaii are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Bank of Hawaii demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KBC Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBC Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBC Groep is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank of Hawaii and KBC Groep

The main advantage of trading using opposite Bank of Hawaii and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii 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.

The idea behind Bank of Hawaii and KBC Groep 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.