Correlation Between KB Financial and LG Innotek
Can any of the company-specific risk be diversified away by investing in both KB Financial and LG Innotek 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 LG Innotek 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 LG Innotek Co, you can compare the effects of market volatilities on KB Financial and LG Innotek 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 LG Innotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and LG Innotek.
Diversification Opportunities for KB Financial and LG Innotek
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 105560 and 011070 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and LG Innotek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Innotek 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 LG Innotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Innotek has no effect on the direction of KB Financial i.e., KB Financial and LG Innotek go up and down completely randomly.
Pair Corralation between KB Financial and LG Innotek
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the LG Innotek. In addition to that, KB Financial is 1.3 times more volatile than LG Innotek Co. It trades about -0.1 of its total potential returns per unit of risk. LG Innotek Co is currently generating about 0.0 per unit of volatility. If you would invest 16,670,000 in LG Innotek Co on September 13, 2024 and sell it today you would lose (80,000) from holding LG Innotek Co or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. LG Innotek Co
Performance |
| Timeline |
| KB Financial Group |
| LG Innotek |
KB Financial and LG Innotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and LG Innotek
The main advantage of trading using opposite KB Financial and LG Innotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, LG Innotek 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 LG Innotek will offset losses from the drop in LG Innotek's long position.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Hana Financial | KB Financial vs. Woori Financial Group | KB Financial vs. Samsung Electronics Co |
| LG Innotek vs. FOODWELL Co | LG Innotek vs. Sam Yang Foods | LG Innotek vs. Ecoplastic | LG Innotek vs. LS Materials |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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