Correlation Between KTB Investment and Robostar CoLtd

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

By analyzing existing cross correlation between KTB Investment Securities and Robostar CoLtd, you can compare the effects of market volatilities on KTB Investment and Robostar CoLtd 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 KTB Investment with a short position of Robostar CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Robostar CoLtd.

Diversification Opportunities for KTB Investment and Robostar CoLtd

0.38

Correlation Coefficient

KTB Investment  Robostar CoLtd

Weak diversification

The 3 months correlation between KTB and Robostar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Robostar CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robostar CoLtd and KTB Investment 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 KTB Investment Securities are associated (or correlated) with Robostar CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robostar CoLtd has no effect on the direction of KTB Investment i.e., KTB Investment and Robostar CoLtd go up and down completely randomly.

Pair Corralation between KTB Investment and Robostar CoLtd

Assuming the 90 days trading horizon KTB Investment Securities is expected to generate 0.92 times more return on investment than Robostar CoLtd. However, KTB Investment Securities is 1.09 times less risky than Robostar CoLtd. It trades about 0.21 of its potential returns per unit of risk. Robostar CoLtd is currently generating about 0.19 per unit of risk. If you would invest  261,500  in KTB Investment Securities on October 4, 2024 and sell it today you would earn a total of  53,000  from holding KTB Investment Securities or generate 20.27% return on investment over 90 days.

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

KTB Investment Securities  vs.  Robostar CoLtd

KTB Investment Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Robostar CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Robostar CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robostar CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KTB Investment and Robostar CoLtd

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

The idea behind KTB Investment Securities and Robostar CoLtd 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 Transaction History module to view history of all your transactions and understand their impact on performance.