Correlation Between Busan Ind and KB Financial
Can any of the company-specific risk be diversified away by investing in both Busan Ind 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 Busan Ind and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and KB Financial Group, you can compare the effects of market volatilities on Busan Ind 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 Busan Ind with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and KB Financial.
Diversification Opportunities for Busan Ind and KB Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and 105560 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind 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 Busan Ind 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 Busan Ind 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 Busan Ind i.e., Busan Ind and KB Financial go up and down completely randomly.
Pair Corralation between Busan Ind and KB Financial
Assuming the 90 days trading horizon Busan Ind is expected to generate 4.71 times more return on investment than KB Financial. However, Busan Ind is 4.71 times more volatile than KB Financial Group. It trades about 0.1 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.17 per unit of risk. If you would invest 5,480,000 in Busan Ind on September 3, 2024 and sell it today you would earn a total of 660,000 from holding Busan Ind or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. KB Financial Group
Performance |
| Timeline |
| Busan Ind |
| KB Financial Group |
Busan Ind and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and KB Financial
The main advantage of trading using opposite Busan Ind and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind 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.| Busan Ind vs. FNC Entertainment Co | Busan Ind vs. Semyung Electric Machinery | Busan Ind vs. Jeju Beer Co | Busan Ind vs. Nasmedia Co |
| KB Financial vs. Cuckoo Homesys Co | KB Financial vs. NICE Information Service | KB Financial vs. Hanjin Transportation Co | KB Financial vs. Lotte Data Communication |
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 Stocks Directory module to find actively traded stocks across global markets.
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