Correlation Between KB Financial and Aurora World
Can any of the company-specific risk be diversified away by investing in both KB Financial and Aurora World 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 Aurora World 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 Aurora World, you can compare the effects of market volatilities on KB Financial and Aurora World 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 Aurora World. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Aurora World.
Diversification Opportunities for KB Financial and Aurora World
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 105560 and Aurora is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Aurora World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora World 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 Aurora World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora World has no effect on the direction of KB Financial i.e., KB Financial and Aurora World go up and down completely randomly.
Pair Corralation between KB Financial and Aurora World
Assuming the 90 days trading horizon KB Financial is expected to generate 1.35 times less return on investment than Aurora World. But when comparing it to its historical volatility, KB Financial Group is 1.34 times less risky than Aurora World. It trades about 0.17 of its potential returns per unit of risk. Aurora World is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 569,000 in Aurora World on September 4, 2024 and sell it today you would earn a total of 48,000 from holding Aurora World or generate 8.44% 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. Aurora World
Performance |
| Timeline |
| KB Financial Group |
| Aurora World |
KB Financial and Aurora World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Aurora World
The main advantage of trading using opposite KB Financial and Aurora World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Aurora World 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 Aurora World will offset losses from the drop in Aurora World's long position.| KB Financial vs. Dongjin Semichem Co | KB Financial vs. AhnLab Inc | KB Financial vs. Posco ICT | KB Financial vs. CJ ENM |
| Aurora World vs. Grand Korea Leisure | Aurora World vs. Handok Clean Tech | Aurora World vs. Clean Science co | Aurora World vs. Daishin Information Communications |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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