Correlation Between Busan Industrial and KB Financial
Can any of the company-specific risk be diversified away by investing in both Busan Industrial 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 Industrial 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 Industrial Co and KB Financial Group, you can compare the effects of market volatilities on Busan Industrial 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 Industrial with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and KB Financial.
Diversification Opportunities for Busan Industrial 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 Industrial 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 Busan Industrial 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 Industrial 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 Busan Industrial i.e., Busan Industrial and KB Financial go up and down completely randomly.
Pair Corralation between Busan Industrial and KB Financial
Assuming the 90 days trading horizon Busan Industrial is expected to generate 2.33 times less return on investment than KB Financial. In addition to that, Busan Industrial is 1.54 times more volatile than KB Financial Group. It trades about 0.02 of its total potential returns per unit of risk. KB Financial Group is currently generating about 0.09 per unit of volatility. If you would invest 6,735,550 in KB Financial Group on September 1, 2024 and sell it today you would earn a total of 2,884,450 from holding KB Financial Group or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. KB Financial Group
Performance |
| Timeline |
| Busan Industrial |
| KB Financial Group |
Busan Industrial and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and KB Financial
The main advantage of trading using opposite Busan Industrial and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial 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 Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| KB Financial vs. Korea Information Engineering | KB Financial vs. SCI Information Service | KB Financial vs. Atinum Investment Co | KB Financial vs. Samyung Trading Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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