Correlation Between ABCO Electronics and KB Financial
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics 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 ABCO Electronics and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and KB Financial Group, you can compare the effects of market volatilities on ABCO Electronics 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 ABCO Electronics with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and KB Financial.
Diversification Opportunities for ABCO Electronics and KB Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ABCO and 105560 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics 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 ABCO Electronics 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 ABCO Electronics 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 ABCO Electronics i.e., ABCO Electronics and KB Financial go up and down completely randomly.
Pair Corralation between ABCO Electronics and KB Financial
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 1.41 times more return on investment than KB Financial. However, ABCO Electronics is 1.41 times more volatile than KB Financial Group. It trades about 0.2 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.01 per unit of risk. If you would invest 498,500 in ABCO Electronics Co on November 8, 2024 and sell it today you would earn a total of 56,500 from holding ABCO Electronics Co or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABCO Electronics Co vs. KB Financial Group
Performance |
| Timeline |
| ABCO Electronics |
| KB Financial Group |
ABCO Electronics and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and KB Financial
The main advantage of trading using opposite ABCO Electronics and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics 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.| ABCO Electronics vs. V One Tech Co | ABCO Electronics vs. Ewon Comfortech Co | ABCO Electronics vs. Orbitech Co | ABCO Electronics vs. MNtech Co |
| KB Financial vs. Hankook Furniture Co | KB Financial vs. Jin Air Co | KB Financial vs. PLAYWITH | KB Financial vs. LG Household Healthcare |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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