Correlation Between KB Financial and Busan Ind
Can any of the company-specific risk be diversified away by investing in both KB Financial and Busan Ind 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 Busan Ind 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 Busan Ind, you can compare the effects of market volatilities on KB Financial and Busan Ind 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 Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Busan Ind.
Diversification Opportunities for KB Financial and Busan Ind
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 105560 and Busan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind 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 Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of KB Financial i.e., KB Financial and Busan Ind go up and down completely randomly.
Pair Corralation between KB Financial and Busan Ind
Assuming the 90 days trading horizon KB Financial is expected to generate 2.81 times less return on investment than Busan Ind. But when comparing it to its historical volatility, KB Financial Group is 4.71 times less risky than Busan Ind. It trades about 0.17 of its potential returns per unit of risk. Busan Ind is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,480,000 in Busan Ind on September 3, 2024 and sell it today you would earn a total of 660,000 from holding Busan Ind or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Busan Ind
Performance |
| Timeline |
| KB Financial Group |
| Busan Ind |
KB Financial and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Busan Ind
The main advantage of trading using opposite KB Financial and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's long position.| KB Financial vs. Cuckoo Homesys Co | KB Financial vs. NICE Information Service | KB Financial vs. Hanjin Transportation Co | KB Financial vs. Lotte Data Communication |
| Busan Ind vs. FNC Entertainment Co | Busan Ind vs. Semyung Electric Machinery | Busan Ind vs. Jeju Beer Co | Busan Ind vs. Nasmedia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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