Correlation Between KBSTAR HealthCare and KBSTAR EURO
Can any of the company-specific risk be diversified away by investing in both KBSTAR HealthCare and KBSTAR EURO 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 EURO 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 EURO STOXX, you can compare the effects of market volatilities on KBSTAR HealthCare and KBSTAR EURO 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 EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBSTAR HealthCare and KBSTAR EURO.
Diversification Opportunities for KBSTAR HealthCare and KBSTAR EURO
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBSTAR and KBSTAR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KBSTAR HealthCare Fixed and KBSTAR EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBSTAR EURO STOXX 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 EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBSTAR EURO STOXX has no effect on the direction of KBSTAR HealthCare i.e., KBSTAR HealthCare and KBSTAR EURO go up and down completely randomly.
Pair Corralation between KBSTAR HealthCare and KBSTAR EURO
Assuming the 90 days trading horizon KBSTAR HealthCare Fixed is expected to generate 0.61 times more return on investment than KBSTAR EURO. However, KBSTAR HealthCare Fixed is 1.63 times less risky than KBSTAR EURO. It trades about 0.05 of its potential returns per unit of risk. KBSTAR EURO STOXX is currently generating about -0.03 per unit of risk. If you would invest 1,149,000 in KBSTAR HealthCare Fixed on September 3, 2024 and sell it today you would earn a total of 45,000 from holding KBSTAR HealthCare Fixed or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KBSTAR HealthCare Fixed vs. KBSTAR EURO STOXX
Performance |
| Timeline |
| KBSTAR HealthCare Fixed |
| KBSTAR EURO STOXX |
KBSTAR HealthCare and KBSTAR EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBSTAR HealthCare and KBSTAR EURO
The main advantage of trading using opposite KBSTAR HealthCare and KBSTAR EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBSTAR HealthCare position performs unexpectedly, KBSTAR EURO 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 EURO will offset losses from the drop in KBSTAR EURO's long position.| KBSTAR HealthCare vs. KBSTAR 200TR | KBSTAR HealthCare vs. KBSTAR EURO STOXX | KBSTAR HealthCare vs. KBSTAR Global Metaverse | KBSTAR HealthCare vs. KBSTAR Short Term IG |
| KBSTAR EURO vs. KBSTAR 200TR | KBSTAR EURO vs. KBSTAR HealthCare Fixed | KBSTAR EURO vs. KBSTAR Global Metaverse | KBSTAR EURO vs. KBSTAR Short Term IG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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