Correlation Between RPBio and KBSTAR 200TR

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

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

Diversification Opportunities for RPBio and KBSTAR 200TR

0.88

Correlation Coefficient

RPBio  KBSTAR 200TR

Very poor diversification

The 3 months correlation between RPBio and KBSTAR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and KBSTAR 200TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBSTAR 200TR and RPBio 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 RPBio Inc 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 RPBio i.e., RPBio and KBSTAR 200TR go up and down completely randomly.

Pair Corralation between RPBio and KBSTAR 200TR

Assuming the 90 days trading horizon RPBio Inc is expected to under-perform the KBSTAR 200TR. In addition to that, RPBio is 1.82 times more volatile than KBSTAR 200TR. It trades about -0.13 of its total potential returns per unit of risk. KBSTAR 200TR is currently generating about -0.06 per unit of volatility. If you would invest  2,017,500  in KBSTAR 200TR on September 3, 2024 and sell it today you would lose (216,500) from holding KBSTAR 200TR or give up 10.73% of portfolio value over 90 days.

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

RPBio Inc  vs.  KBSTAR 200TR

RPBio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPBio Inc 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 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 latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with RPBio and KBSTAR 200TR

The main advantage of trading using opposite RPBio and KBSTAR 200TR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPBio 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 RPBio Inc 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.