Correlation Between KBC Groep and Bank of Hawaii

Can any of the company-specific risk be diversified away by investing in both KBC Groep and Bank of Hawaii 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 Bank of Hawaii 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 Bank of Hawaii, you can compare the effects of market volatilities on KBC Groep and Bank of Hawaii 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 Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBC Groep and Bank of Hawaii.

Diversification Opportunities for KBC Groep and Bank of Hawaii

-0.54

Correlation Coefficient

KBC Groep  Bank of Hawaii

Excellent diversification

The 3 months correlation between KBC and Bank is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding KBC Groep NV and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii 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 Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of KBC Groep i.e., KBC Groep and Bank of Hawaii go up and down completely randomly.

Pair Corralation between KBC Groep and Bank of Hawaii

Assuming the 90 days horizon KBC Groep NV is expected to under-perform the Bank of Hawaii. But the pink sheet apears to be less risky and, when comparing its historical volatility, KBC Groep NV is 1.75 times less risky than Bank of Hawaii. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Bank of Hawaii is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,418  in Bank of Hawaii on September 4, 2024 and sell it today you would earn a total of  1,409  from holding Bank of Hawaii or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

KBC Groep NV  vs.  Bank of Hawaii

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.

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.

Pair Trading with KBC Groep and Bank of Hawaii

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

The idea behind KBC Groep NV and Bank of Hawaii 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.