Correlation Between UNISEM and KBSTAR HealthCare

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

By analyzing existing cross correlation between UNISEM Co and KBSTAR HealthCare Fixed, you can compare the effects of market volatilities on UNISEM and KBSTAR HealthCare 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 UNISEM with a short position of KBSTAR HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNISEM and KBSTAR HealthCare.

Diversification Opportunities for UNISEM and KBSTAR HealthCare

0.67

Correlation Coefficient

UNISEM  KBSTAR HealthCare

Poor diversification

The 3 months correlation between UNISEM and KBSTAR is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding UNISEM Co and KBSTAR HealthCare Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBSTAR HealthCare Fixed and UNISEM 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 UNISEM Co are associated (or correlated) with KBSTAR HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBSTAR HealthCare Fixed has no effect on the direction of UNISEM i.e., UNISEM and KBSTAR HealthCare go up and down completely randomly.

Pair Corralation between UNISEM and KBSTAR HealthCare

Assuming the 90 days trading horizon UNISEM Co is expected to under-perform the KBSTAR HealthCare. In addition to that, UNISEM is 5.03 times more volatile than KBSTAR HealthCare Fixed. It trades about -0.07 of its total potential returns per unit of risk. KBSTAR HealthCare Fixed is currently generating about -0.03 per unit of volatility. If you would invest  1,221,000  in KBSTAR HealthCare Fixed on September 4, 2024 and sell it today you would lose (14,500) from holding KBSTAR HealthCare Fixed or give up 1.19% of portfolio value over 90 days.

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

UNISEM Co  vs.  KBSTAR HealthCare Fixed

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KBSTAR HealthCare Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBSTAR HealthCare Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KBSTAR HealthCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UNISEM and KBSTAR HealthCare

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

The idea behind UNISEM Co and KBSTAR HealthCare Fixed 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.