Correlation Between Hotel Shilla and KB Financial
Can any of the company-specific risk be diversified away by investing in both Hotel Shilla and KB Financial 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 Hotel Shilla and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotel Shilla Co and KB Financial Group, you can compare the effects of market volatilities on Hotel Shilla and KB Financial 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 Hotel Shilla with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotel Shilla and KB Financial.
Diversification Opportunities for Hotel Shilla and KB Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hotel and 105560 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Shilla Co and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Hotel Shilla 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 Hotel Shilla Co are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Hotel Shilla i.e., Hotel Shilla and KB Financial go up and down completely randomly.
Pair Corralation between Hotel Shilla and KB Financial
Assuming the 90 days trading horizon Hotel Shilla Co is expected to under-perform the KB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Hotel Shilla Co is 1.67 times less risky than KB Financial. The stock trades about -0.1 of its potential returns per unit of risk. The KB Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,489,779 in KB Financial Group on October 13, 2024 and sell it today you would earn a total of 4,290,221 from holding KB Financial Group or generate 95.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hotel Shilla Co vs. KB Financial Group
Performance |
| Timeline |
| Hotel Shilla |
| KB Financial Group |
Hotel Shilla and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotel Shilla and KB Financial
The main advantage of trading using opposite Hotel Shilla and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Shilla position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.| Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. LG Energy Solution | Hotel Shilla vs. SK Hynix |
| KB Financial vs. Hotel Shilla Co | KB Financial vs. Shinsegae Food | KB Financial vs. Lotte Non Life Insurance | KB Financial vs. PLAYWITH |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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