Correlation Between BlackRock Capital and CROBEX10

Can any of the company-specific risk be diversified away by investing in both BlackRock Capital and CROBEX10 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 BlackRock Capital and CROBEX10 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock Capital Allocation and CROBEX10, you can compare the effects of market volatilities on BlackRock Capital and CROBEX10 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 BlackRock Capital with a short position of CROBEX10. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Capital and CROBEX10.

Diversification Opportunities for BlackRock Capital and CROBEX10

0.87

Correlation Coefficient

BlackRock Capital  CROBEX10

Very poor diversification

The 3 months correlation between BlackRock and CROBEX10 is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and CROBEX10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROBEX10 and BlackRock Capital 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 BlackRock Capital Allocation are associated (or correlated) with CROBEX10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROBEX10 has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and CROBEX10 go up and down completely randomly.

Pair Corralation between BlackRock Capital and CROBEX10

Given the investment horizon of 90 days BlackRock Capital is expected to generate 1.51 times less return on investment than CROBEX10. But when comparing it to its historical volatility, BlackRock Capital Allocation is 1.12 times less risky than CROBEX10. It trades about 0.19 of its potential returns per unit of risk. CROBEX10 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  208,458  in CROBEX10 on May 6, 2025 and sell it today you would earn a total of  24,787  from holding CROBEX10 or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

BlackRock Capital Allocation  vs.  CROBEX10

Pair Trading with BlackRock Capital and CROBEX10

The main advantage of trading using opposite BlackRock Capital and CROBEX10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Capital position performs unexpectedly, CROBEX10 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 CROBEX10 will offset losses from the drop in CROBEX10's long position.

The idea behind BlackRock Capital Allocation and CROBEX10 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.