Correlation Between KB Financial and Korea Environment
Can any of the company-specific risk be diversified away by investing in both KB Financial and Korea Environment 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 Korea Environment 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 Korea Environment Technology, you can compare the effects of market volatilities on KB Financial and Korea Environment 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 Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Korea Environment.
Diversification Opportunities for KB Financial and Korea Environment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Korea is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment 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 Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of KB Financial i.e., KB Financial and Korea Environment go up and down completely randomly.
Pair Corralation between KB Financial and Korea Environment
Assuming the 90 days trading horizon KB Financial Group is expected to generate 4.82 times more return on investment than Korea Environment. However, KB Financial is 4.82 times more volatile than Korea Environment Technology. It trades about 0.25 of its potential returns per unit of risk. Korea Environment Technology is currently generating about -0.46 per unit of risk. If you would invest 8,550,000 in KB Financial Group on November 6, 2024 and sell it today you would earn a total of 580,000 from holding KB Financial Group or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
KB Financial Group vs. Korea Environment Technology
Performance |
| Timeline |
| KB Financial Group |
| Korea Environment |
KB Financial and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Korea Environment
The main advantage of trading using opposite KB Financial and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Korea Environment 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 Korea Environment will offset losses from the drop in Korea Environment's long position.| KB Financial vs. YG Entertainment | KB Financial vs. SM Entertainment Co | KB Financial vs. Nasmedia Co | KB Financial vs. Digital Multimedia Technology |
| Korea Environment vs. Samsung Card Co | Korea Environment vs. EBEST Investment Securities | Korea Environment vs. Koh Young Technology | Korea Environment vs. Hansol Chemica |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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