Correlation Between KBC Ancora and SMA Solar

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

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

Diversification Opportunities for KBC Ancora and SMA Solar

0.84

Correlation Coefficient

KBC Ancora  SMA Solar

Very poor diversification

The 3 months correlation between KBC and SMA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KBC Ancora SCA and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and KBC Ancora 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 Ancora SCA are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of KBC Ancora i.e., KBC Ancora and SMA Solar go up and down completely randomly.

Pair Corralation between KBC Ancora and SMA Solar

Assuming the 90 days horizon KBC Ancora is expected to generate 2.6 times less return on investment than SMA Solar. But when comparing it to its historical volatility, KBC Ancora SCA is 3.2 times less risky than SMA Solar. It trades about 0.21 of its potential returns per unit of risk. SMA Solar Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,395  in SMA Solar Technology on April 22, 2025 and sell it today you would earn a total of  665.00  from holding SMA Solar Technology or generate 47.67% return on investment over 90 days.

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

KBC Ancora SCA  vs.  SMA Solar Technology

KBC Ancora SCA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora SCA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KBC Ancora reported solid returns over the last few months and may actually be approaching a breakup point.

SMA Solar Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SMA Solar Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SMA Solar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KBC Ancora and SMA Solar

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

The idea behind KBC Ancora SCA and SMA Solar Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.