Correlation Between KB Financial and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both KB Financial and Korea Electronic 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 Electronic 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 Electronic Certification, you can compare the effects of market volatilities on KB Financial and Korea Electronic 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 Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Korea Electronic.
Diversification Opportunities for KB Financial and Korea Electronic
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Korea is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of KB Financial i.e., KB Financial and Korea Electronic go up and down completely randomly.
Pair Corralation between KB Financial and Korea Electronic
Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.9 times more return on investment than Korea Electronic. However, KB Financial Group is 1.11 times less risky than Korea Electronic. It trades about 0.08 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about -0.03 per unit of risk. If you would invest 4,751,124 in KB Financial Group on September 3, 2024 and sell it today you would earn a total of 4,868,876 from holding KB Financial Group or generate 102.48% 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. Korea Electronic Certification
Performance |
| Timeline |
| KB Financial Group |
| Korea Electronic Cer |
KB Financial and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Korea Electronic
The main advantage of trading using opposite KB Financial and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Korea Electronic 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 Electronic will offset losses from the drop in Korea Electronic's long position.| KB Financial vs. Cuckoo Homesys Co | KB Financial vs. NICE Information Service | KB Financial vs. Hanjin Transportation Co | KB Financial vs. Lotte Data Communication |
| Korea Electronic vs. LG Display | Korea Electronic vs. Hyundai Motor | Korea Electronic vs. Hyundai Motor Co | Korea Electronic vs. Hyundai Motor Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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