Correlation Between Korea Real and KB Financial
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Korea Real and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and KB Financial Group, you can compare the effects of market volatilities on Korea Real 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 Korea Real with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and KB Financial.
Diversification Opportunities for Korea Real and KB Financial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and 105560 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate 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 Korea Real 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 Korea Real Estate 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 Korea Real i.e., Korea Real and KB Financial go up and down completely randomly.
Pair Corralation between Korea Real and KB Financial
Assuming the 90 days trading horizon Korea Real is expected to generate 15.8 times less return on investment than KB Financial. But when comparing it to its historical volatility, Korea Real Estate is 2.44 times less risky than KB Financial. It trades about 0.01 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,606,990 in KB Financial Group on September 2, 2024 and sell it today you would earn a total of 2,013,010 from holding KB Financial Group or generate 26.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. KB Financial Group
Performance |
| Timeline |
| Korea Real Estate |
| KB Financial Group |
Korea Real and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and KB Financial
The main advantage of trading using opposite Korea Real and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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.| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
| KB Financial vs. SS TECH | KB Financial vs. Eagle Veterinary Technology | KB Financial vs. Chin Yang Chemical | KB Financial vs. Shinsung Delta Tech |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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