Correlation Between Eurobank Ergasias and KBC Groep

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

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

Diversification Opportunities for Eurobank Ergasias and KBC Groep

0.51

Correlation Coefficient

Eurobank Ergasias  KBC Groep

Very weak diversification

The 3 months correlation between Eurobank and KBC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Eurobank Ergasias Services 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 Eurobank Ergasias 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 Eurobank Ergasias Services 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 Eurobank Ergasias i.e., Eurobank Ergasias and KBC Groep go up and down completely randomly.

Pair Corralation between Eurobank Ergasias and KBC Groep

Assuming the 90 days horizon Eurobank Ergasias Services is expected to under-perform the KBC Groep. But the pink sheet apears to be less risky and, when comparing its historical volatility, Eurobank Ergasias Services is 1.94 times less risky than KBC Groep. The pink sheet trades about -0.17 of its potential returns per unit of risk. The KBC Groep NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,556  in KBC Groep NV on August 31, 2024 and sell it today you would earn a total of  1.00  from holding KBC Groep NV or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eurobank Ergasias Services  vs.  KBC Groep NV

Eurobank Ergasias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurobank Ergasias Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Eurobank Ergasias and KBC Groep

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

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.