Correlation Between Floridienne and KBC Groep

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

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

Diversification Opportunities for Floridienne and KBC Groep

0.35

Correlation Coefficient

Floridienne  KBC Groep

Weak diversification

The 3 months correlation between Floridienne and KBC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne 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 Floridienne 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 Floridienne 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 Floridienne i.e., Floridienne and KBC Groep go up and down completely randomly.

Pair Corralation between Floridienne and KBC Groep

Assuming the 90 days trading horizon Floridienne is expected to generate 1.3 times less return on investment than KBC Groep. In addition to that, Floridienne is 1.94 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 0.07 per unit of volatility. If you would invest  6,999  in KBC Groep NV on September 23, 2024 and sell it today you would earn a total of  333.00  from holding KBC Groep NV or generate 4.76% return on investment over 90 days.

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

Floridienne  vs.  KBC Groep NV

Floridienne

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Floridienne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Floridienne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

KBC Groep NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Groep NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, KBC Groep is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Floridienne and KBC Groep

The main advantage of trading using opposite Floridienne and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floridienne 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 Floridienne 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.