Correlation Between KBC Groep and Ontex Group

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

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

Diversification Opportunities for KBC Groep and Ontex Group

-0.06

Correlation Coefficient

KBC Groep  Ontex Group

Good diversification

The 3 months correlation between KBC and Ontex is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV and KBC Groep 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 KBC Groep NV are associated (or correlated) with Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of KBC Groep i.e., KBC Groep and Ontex Group go up and down completely randomly.

Pair Corralation between KBC Groep and Ontex Group

Assuming the 90 days trading horizon KBC Groep is expected to generate 1.32 times less return on investment than Ontex Group. But when comparing it to its historical volatility, KBC Groep NV is 1.32 times less risky than Ontex Group. It trades about 0.25 of its potential returns per unit of risk. Ontex Group NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  748.00  in Ontex Group NV on September 21, 2024 and sell it today you would earn a total of  54.00  from holding Ontex Group NV or generate 7.22% return on investment over 90 days.

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

KBC Groep NV  vs.  Ontex Group NV

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.

Ontex Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontex Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KBC Groep and Ontex Group

The main advantage of trading using opposite KBC Groep and Ontex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBC Groep position performs unexpectedly, Ontex 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 Ontex Group will offset losses from the drop in Ontex Group's long position.

The idea behind KBC Groep NV and Ontex 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.