Correlation Between KB Financial and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both KB Financial and Oriental Precision 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 Oriental Precision 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 Oriental Precision Engineering, you can compare the effects of market volatilities on KB Financial and Oriental Precision 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 Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Oriental Precision.
Diversification Opportunities for KB Financial and Oriental Precision
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Oriental is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision 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 Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of KB Financial i.e., KB Financial and Oriental Precision go up and down completely randomly.
Pair Corralation between KB Financial and Oriental Precision
Assuming the 90 days trading horizon KB Financial is expected to generate 1.19 times less return on investment than Oriental Precision. But when comparing it to its historical volatility, KB Financial Group is 1.3 times less risky than Oriental Precision. It trades about 0.08 of its potential returns per unit of risk. Oriental Precision Engineering is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 256,437 in Oriental Precision Engineering on October 29, 2024 and sell it today you would earn a total of 316,563 from holding Oriental Precision Engineering or generate 123.45% 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. Oriental Precision Engineering
Performance |
| Timeline |
| KB Financial Group |
| Oriental Precision |
KB Financial and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Oriental Precision
The main advantage of trading using opposite KB Financial and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| KB Financial vs. Iljin Display | KB Financial vs. Korea Steel Co | KB Financial vs. Fine Besteel Co | KB Financial vs. Daesung Industrial Co |
| Oriental Precision vs. Korea Industrial Co | Oriental Precision vs. Youngchang Chemical Co | Oriental Precision vs. Youngbo Chemical Co | Oriental Precision vs. Tae Kyung Chemical |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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