Correlation Between BCAP SET100 and KTAM SET

Can any of the company-specific risk be diversified away by investing in both BCAP SET100 and KTAM SET 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 BCAP SET100 and KTAM SET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BCAP SET100 and KTAM SET Food, you can compare the effects of market volatilities on BCAP SET100 and KTAM SET 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 BCAP SET100 with a short position of KTAM SET. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCAP SET100 and KTAM SET.

Diversification Opportunities for BCAP SET100 and KTAM SET

0.0

Correlation Coefficient

BCAP SET100  KTAM SET

Pay attention - limited upside

The 3 months correlation between BCAP and KTAM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BCAP SET100 and KTAM SET Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTAM SET Food and BCAP SET100 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 BCAP SET100 are associated (or correlated) with KTAM SET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTAM SET Food has no effect on the direction of BCAP SET100 i.e., BCAP SET100 and KTAM SET go up and down completely randomly.

Pair Corralation between BCAP SET100 and KTAM SET

If you would invest (100.00) in KTAM SET Food on October 7, 2024 and sell it today you would earn a total of  100.00  from holding KTAM SET Food or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BCAP SET100  vs.  KTAM SET Food

BCAP SET100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCAP SET100 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BCAP SET100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KTAM SET Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KTAM SET Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KTAM SET is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BCAP SET100 and KTAM SET

The main advantage of trading using opposite BCAP SET100 and KTAM SET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCAP SET100 position performs unexpectedly, KTAM SET 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 KTAM SET will offset losses from the drop in KTAM SET's long position.

The idea behind BCAP SET100 and KTAM SET Food 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.