Correlation Between K Bro and Brambles

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

By analyzing existing cross correlation between K Bro Linen and Brambles Ltd ADR, you can compare the effects of market volatilities on K Bro and Brambles 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 K Bro with a short position of Brambles. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Bro and Brambles.

Diversification Opportunities for K Bro and Brambles

0.19

Correlation Coefficient

K Bro  Brambles

Average diversification

The 3 months correlation between KBRLF and Brambles is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding K Bro Linen and Brambles Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles ADR and K Bro 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 K Bro Linen are associated (or correlated) with Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles ADR has no effect on the direction of K Bro i.e., K Bro and Brambles go up and down completely randomly.

Pair Corralation between K Bro and Brambles

Assuming the 90 days horizon K Bro Linen is expected to under-perform the Brambles. But the pink sheet apears to be less risky and, when comparing its historical volatility, K Bro Linen is 1.72 times less risky than Brambles. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Brambles Ltd ADR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,798  in Brambles Ltd ADR on May 15, 2025 and sell it today you would earn a total of  241.00  from holding Brambles Ltd ADR or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.05%
Values	Daily Returns

K Bro Linen  vs.  Brambles Ltd ADR

K Bro Linen

Risk-Adjusted Performance

Weakest

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, K Bro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brambles ADR

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Brambles Ltd ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Brambles may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with K Bro and Brambles

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

The idea behind K Bro Linen and Brambles Ltd ADR 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.