Correlation Between K Bro and Rentokil Initial

Can any of the company-specific risk be diversified away by investing in both K Bro and Rentokil Initial 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 Rentokil Initial 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 Rentokil Initial PLC, you can compare the effects of market volatilities on K Bro and Rentokil Initial 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 Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Bro and Rentokil Initial.

Diversification Opportunities for K Bro and Rentokil Initial

0.14

Correlation Coefficient

K Bro  Rentokil Initial

Average diversification

The 3 months correlation between KBRLF and Rentokil is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding K Bro Linen and Rentokil Initial PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rentokil Initial PLC 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 Rentokil Initial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rentokil Initial PLC has no effect on the direction of K Bro i.e., K Bro and Rentokil Initial go up and down completely randomly.

Pair Corralation between K Bro and Rentokil Initial

Assuming the 90 days horizon K Bro Linen is expected to under-perform the Rentokil Initial. But the pink sheet apears to be less risky and, when comparing its historical volatility, K Bro Linen is 2.3 times less risky than Rentokil Initial. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Rentokil Initial PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,294  in Rentokil Initial PLC on April 30, 2025 and sell it today you would earn a total of  111.00  from holding Rentokil Initial PLC or generate 4.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.66%
Values	Daily Returns

K Bro Linen  vs.  Rentokil Initial PLC

K Bro Linen

Risk-Adjusted Performance

Very Weak

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.

Rentokil Initial PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rentokil Initial PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Rentokil Initial is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with K Bro and Rentokil Initial

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

The idea behind K Bro Linen and Rentokil Initial PLC 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.