Correlation Between KBSTAR 200TR and SK Holdings

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

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

Diversification Opportunities for KBSTAR 200TR and SK Holdings

0.31

Correlation Coefficient

KBSTAR 200TR  SK Holdings

Weak diversification

The 3 months correlation between KBSTAR and 034730 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding KBSTAR 200TR and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings and KBSTAR 200TR 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 200TR are associated (or correlated) with SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of KBSTAR 200TR i.e., KBSTAR 200TR and SK Holdings go up and down completely randomly.

Pair Corralation between KBSTAR 200TR and SK Holdings

Assuming the 90 days trading horizon KBSTAR 200TR is expected to under-perform the SK Holdings. But the etf apears to be less risky and, when comparing its historical volatility, KBSTAR 200TR is 1.53 times less risky than SK Holdings. The etf trades about -0.11 of its potential returns per unit of risk. The SK Holdings Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,300,000  in SK Holdings Co on August 31, 2024 and sell it today you would lose (180,000) from holding SK Holdings Co or give up 1.26% of portfolio value over 90 days.

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

KBSTAR 200TR  vs.  SK Holdings Co

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.

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Holdings 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 200TR and SK Holdings

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

The idea behind KBSTAR 200TR and SK Holdings Co 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..