Correlation Between KBSTAR 200TR and KBSTAR HealthCare

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

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

Diversification Opportunities for KBSTAR 200TR and KBSTAR HealthCare

0.86

Correlation Coefficient

KBSTAR 200TR  KBSTAR HealthCare

Very poor diversification

The 3 months correlation between KBSTAR and KBSTAR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding KBSTAR 200TR 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 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 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 KBSTAR 200TR i.e., KBSTAR 200TR and KBSTAR HealthCare go up and down completely randomly.

Pair Corralation between KBSTAR 200TR and KBSTAR HealthCare

Assuming the 90 days trading horizon KBSTAR 200TR is expected to generate 1.24 times less return on investment than KBSTAR HealthCare. In addition to that, KBSTAR 200TR is 1.86 times more volatile than KBSTAR HealthCare Fixed. It trades about 0.03 of its total potential returns per unit of risk. KBSTAR HealthCare Fixed is currently generating about 0.06 per unit of volatility. If you would invest  1,046,905  in KBSTAR HealthCare Fixed on December 2, 2024 and sell it today you would earn a total of  186,595  from holding KBSTAR HealthCare Fixed or generate 17.82% return on investment over 90 days.

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

KBSTAR 200TR  vs.  KBSTAR HealthCare Fixed

KBSTAR 200TR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KBSTAR 200TR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

KBSTAR HealthCare Fixed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KBSTAR HealthCare Fixed are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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 KBSTAR 200TR and KBSTAR HealthCare

The main advantage of trading using opposite KBSTAR 200TR and KBSTAR HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBSTAR 200TR 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 KBSTAR 200TR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.