Correlation Between KB Financial and Hwasung Industrial
Can any of the company-specific risk be diversified away by investing in both KB Financial and Hwasung Industrial 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 KB Financial and Hwasung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and Hwasung Industrial Co, you can compare the effects of market volatilities on KB Financial and Hwasung Industrial 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 KB Financial with a short position of Hwasung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Hwasung Industrial.
Diversification Opportunities for KB Financial and Hwasung Industrial
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Hwasung is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Hwasung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwasung Industrial and KB Financial 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 KB Financial Group are associated (or correlated) with Hwasung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwasung Industrial has no effect on the direction of KB Financial i.e., KB Financial and Hwasung Industrial go up and down completely randomly.
Pair Corralation between KB Financial and Hwasung Industrial
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.73 times more return on investment than Hwasung Industrial. However, KB Financial is 1.73 times more volatile than Hwasung Industrial Co. It trades about 0.07 of its potential returns per unit of risk. Hwasung Industrial Co is currently generating about 0.01 per unit of risk. If you would invest 4,861,252 in KB Financial Group on November 5, 2024 and sell it today you would earn a total of 4,308,748 from holding KB Financial Group or generate 88.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Hwasung Industrial Co
Performance |
| Timeline |
| KB Financial Group |
| Hwasung Industrial |
KB Financial and Hwasung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Hwasung Industrial
The main advantage of trading using opposite KB Financial and Hwasung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Hwasung Industrial 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 Hwasung Industrial will offset losses from the drop in Hwasung Industrial's long position.| KB Financial vs. Woori Technology | KB Financial vs. Chorokbaem Healthcare Co | KB Financial vs. KTB Investment Securities | KB Financial vs. iNtRON Biotechnology |
| Hwasung Industrial vs. Sangsin Energy Display | Hwasung Industrial vs. TJ media Co | Hwasung Industrial vs. Alton Sports CoLtd | Hwasung Industrial vs. T3 Entertainment 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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