Correlation Between KB Financial and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both KB Financial and Sejong Industrial 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 Sejong Industrial 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 Sejong Industrial, you can compare the effects of market volatilities on KB Financial and Sejong Industrial 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 Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Sejong Industrial.
Diversification Opportunities for KB Financial and Sejong Industrial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 105560 and Sejong is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial 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 Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of KB Financial i.e., KB Financial and Sejong Industrial go up and down completely randomly.
Pair Corralation between KB Financial and Sejong Industrial
Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.77 times more return on investment than Sejong Industrial. However, KB Financial Group is 1.3 times less risky than Sejong Industrial. It trades about 0.17 of its potential returns per unit of risk. Sejong Industrial is currently generating about -0.18 per unit of risk. If you would invest 9,070,000 in KB Financial Group on September 4, 2024 and sell it today you would earn a total of 570,000 from holding KB Financial Group or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Sejong Industrial
Performance |
| Timeline |
| KB Financial Group |
| Sejong Industrial |
KB Financial and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Sejong Industrial
The main advantage of trading using opposite KB Financial and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| KB Financial vs. Dongjin Semichem Co | KB Financial vs. AhnLab Inc | KB Financial vs. Posco ICT | KB Financial vs. CJ ENM |
| Sejong Industrial vs. KMH Hitech Co | Sejong Industrial vs. Raontech | Sejong Industrial vs. Hwangkum Steel Technology | Sejong Industrial vs. CU Tech Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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