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
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KBSTAR and KBSTAR is 0.25. 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 1.7 times more return on investment than KBSTAR HealthCare. However, KBSTAR 200TR is 1.7 times more volatile than KBSTAR HealthCare Fixed. It trades about -0.11 of its potential returns per unit of risk. KBSTAR HealthCare Fixed is currently generating about -0.22 per unit of risk. If you would invest 1,917,000 in KBSTAR 200TR on August 28, 2024 and sell it today you would lose (57,000) from holding KBSTAR 200TR or give up 2.97% 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. KBSTAR HealthCare Fixed
Performance |
| Timeline |
| KBSTAR 200TR |
| KBSTAR HealthCare Fixed |
KBSTAR 200TR and KBSTAR HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
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.| KBSTAR 200TR vs. Busan Industrial Co | KBSTAR 200TR vs. Busan Ind | KBSTAR 200TR vs. Mirae Asset Daewoo | KBSTAR 200TR vs. Shinhan WTI Futures |
| KBSTAR HealthCare vs. Busan Industrial Co | KBSTAR HealthCare vs. Busan Ind | KBSTAR HealthCare vs. Mirae Asset Daewoo | KBSTAR HealthCare vs. Shinhan WTI Futures |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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