Correlation Between KBSTAR HealthCare and KBSTAR 200TR

Can any of the company-specific risk be diversified away by investing in both KBSTAR HealthCare and KBSTAR 200TR 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 KBSTAR HealthCare and KBSTAR 200TR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KBSTAR HealthCare Fixed and KBSTAR 200TR, you can compare the effects of market volatilities on KBSTAR HealthCare and KBSTAR 200TR 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 KBSTAR HealthCare with a short position of KBSTAR 200TR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBSTAR HealthCare and KBSTAR 200TR.

Diversification Opportunities for KBSTAR HealthCare and KBSTAR 200TR

0.6

Correlation Coefficient

KBSTAR HealthCare  KBSTAR 200TR

Poor diversification

The 3 months correlation between KBSTAR and KBSTAR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding KBSTAR HealthCare Fixed and KBSTAR 200TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBSTAR 200TR and KBSTAR HealthCare 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 KBSTAR HealthCare Fixed are associated (or correlated) with KBSTAR 200TR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBSTAR 200TR has no effect on the direction of KBSTAR HealthCare i.e., KBSTAR HealthCare and KBSTAR 200TR go up and down completely randomly.

Pair Corralation between KBSTAR HealthCare and KBSTAR 200TR

Assuming the 90 days trading horizon KBSTAR HealthCare Fixed is expected to generate 0.59 times more return on investment than KBSTAR 200TR. However, KBSTAR HealthCare Fixed is 1.7 times less risky than KBSTAR 200TR. It trades about -0.04 of its potential returns per unit of risk. KBSTAR 200TR is currently generating about -0.08 per unit of risk. If you would invest  1,221,000  in KBSTAR HealthCare Fixed on September 4, 2024 and sell it today you would lose (22,000) from holding KBSTAR HealthCare Fixed or give up 1.8% of portfolio value over 90 days.

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

KBSTAR HealthCare Fixed  vs.  KBSTAR 200TR

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.

KBSTAR 200TR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBSTAR 200TR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KBSTAR 200TR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KBSTAR HealthCare and KBSTAR 200TR

The main advantage of trading using opposite KBSTAR HealthCare and KBSTAR 200TR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBSTAR HealthCare position performs unexpectedly, KBSTAR 200TR 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 200TR will offset losses from the drop in KBSTAR 200TR's long position.

The idea behind KBSTAR HealthCare Fixed and KBSTAR 200TR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.