Correlation Between Korea Gas and KB Financial
Can any of the company-specific risk be diversified away by investing in both Korea Gas 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 Gas 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 Gas and KB Financial Group, you can compare the effects of market volatilities on Korea Gas 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 Gas with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Gas and KB Financial.
Diversification Opportunities for Korea Gas and KB Financial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and 105560 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Korea Gas 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 Gas 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 Gas 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 Gas i.e., Korea Gas and KB Financial go up and down completely randomly.
Pair Corralation between Korea Gas and KB Financial
Assuming the 90 days trading horizon Korea Gas is expected to generate 1.56 times more return on investment than KB Financial. However, Korea Gas is 1.56 times more volatile than KB Financial Group. It trades about 0.08 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.12 per unit of risk. If you would invest 2,475,000 in Korea Gas on August 27, 2024 and sell it today you would earn a total of 2,160,000 from holding Korea Gas or generate 87.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Gas vs. KB Financial Group
Performance |
| Timeline |
| Korea Gas |
| KB Financial Group |
Korea Gas and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Gas and KB Financial
The main advantage of trading using opposite Korea Gas and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Gas 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 Gas vs. KB Financial Group | Korea Gas vs. Shinhan Financial Group | Korea Gas vs. Hana Financial | Korea Gas vs. Woori Financial Group |
| KB Financial vs. Korea New Network | KB Financial vs. Dong A Eltek | KB Financial vs. Dreamus Company | KB Financial vs. SK Bioscience 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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