Correlation Between Posco ICT and KB Financial
Can any of the company-specific risk be diversified away by investing in both Posco ICT 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 Posco ICT and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco ICT and KB Financial Group, you can compare the effects of market volatilities on Posco ICT 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 Posco ICT with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco ICT and KB Financial.
Diversification Opportunities for Posco ICT and KB Financial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Posco and 105560 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Posco ICT 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 Posco ICT 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 Posco ICT 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 Posco ICT i.e., Posco ICT and KB Financial go up and down completely randomly.
Pair Corralation between Posco ICT and KB Financial
Assuming the 90 days trading horizon Posco ICT is expected to under-perform the KB Financial. In addition to that, Posco ICT is 1.26 times more volatile than KB Financial Group. It trades about -0.16 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.14 per unit of volatility. If you would invest 9,270,000 in KB Financial Group on September 12, 2024 and sell it today you would lose (940,000) from holding KB Financial Group or give up 10.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco ICT vs. KB Financial Group
Performance |
| Timeline |
| Posco ICT |
| KB Financial Group |
Posco ICT and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco ICT and KB Financial
The main advantage of trading using opposite Posco ICT and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco ICT 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.| Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul Semiconductor Co |
| KB Financial vs. Shinhan Financial Group | KB Financial vs. Hana Financial | KB Financial vs. Woori Financial Group | KB Financial vs. Samsung Electronics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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