Correlation Between KB Financial and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both KB Financial and Hankuk Steel 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 Hankuk Steel 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 Hankuk Steel Wire, you can compare the effects of market volatilities on KB Financial and Hankuk Steel 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 Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Hankuk Steel.
Diversification Opportunities for KB Financial and Hankuk Steel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Hankuk is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire 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 Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of KB Financial i.e., KB Financial and Hankuk Steel go up and down completely randomly.
Pair Corralation between KB Financial and Hankuk Steel
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.88 times more return on investment than Hankuk Steel. However, KB Financial is 1.88 times more volatile than Hankuk Steel Wire. It trades about 0.08 of its potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.0 per unit of risk. If you would invest 8,763,353 in KB Financial Group on August 25, 2024 and sell it today you would earn a total of 1,076,647 from holding KB Financial Group or generate 12.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Hankuk Steel Wire
Performance |
| Timeline |
| KB Financial Group |
| Hankuk Steel Wire |
KB Financial and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Hankuk Steel
The main advantage of trading using opposite KB Financial and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Hankuk Steel 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| KB Financial vs. Sejong Telecom | KB Financial vs. Nice Information Telecommunication | KB Financial vs. Ssangyong Information Communication | KB Financial vs. SCI Information Service |
| Hankuk Steel vs. Daechang Steel Co | Hankuk Steel vs. Dongbu Steel Co | Hankuk Steel vs. Gyeongnam Steel Co | Hankuk Steel vs. Husteel |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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