Correlation Between KB Financial and Samsung Heavy
Can any of the company-specific risk be diversified away by investing in both KB Financial and Samsung Heavy 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 Samsung Heavy 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 Samsung Heavy Industries, you can compare the effects of market volatilities on KB Financial and Samsung Heavy 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 Samsung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Samsung Heavy.
Diversification Opportunities for KB Financial and Samsung Heavy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 105560 and Samsung is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Samsung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Heavy Industries 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 Samsung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Heavy Industries has no effect on the direction of KB Financial i.e., KB Financial and Samsung Heavy go up and down completely randomly.
Pair Corralation between KB Financial and Samsung Heavy
Assuming the 90 days trading horizon KB Financial is expected to generate 2.29 times less return on investment than Samsung Heavy. But when comparing it to its historical volatility, KB Financial Group is 1.95 times less risky than Samsung Heavy. It trades about 0.17 of its potential returns per unit of risk. Samsung Heavy Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 954,000 in Samsung Heavy Industries on September 4, 2024 and sell it today you would earn a total of 138,000 from holding Samsung Heavy Industries or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Samsung Heavy Industries
Performance |
| Timeline |
| KB Financial Group |
| Samsung Heavy Industries |
KB Financial and Samsung Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Samsung Heavy
The main advantage of trading using opposite KB Financial and Samsung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Samsung Heavy 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 Samsung Heavy will offset losses from the drop in Samsung Heavy's long position.| KB Financial vs. Dongjin Semichem Co | KB Financial vs. AhnLab Inc | KB Financial vs. Posco ICT | KB Financial vs. CJ ENM |
| Samsung Heavy vs. LG Display | Samsung Heavy vs. Hyundai Motor | Samsung Heavy vs. Hyundai Motor Co | Samsung Heavy vs. Hyundai Motor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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