Correlation Between KB Financial and Union Materials
Can any of the company-specific risk be diversified away by investing in both KB Financial and Union Materials 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 Union Materials 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 Union Materials Corp, you can compare the effects of market volatilities on KB Financial and Union Materials 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 Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Union Materials.
Diversification Opportunities for KB Financial and Union Materials
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 105560 and Union is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp 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 Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of KB Financial i.e., KB Financial and Union Materials go up and down completely randomly.
Pair Corralation between KB Financial and Union Materials
Assuming the 90 days trading horizon KB Financial is expected to generate 1.13 times less return on investment than Union Materials. But when comparing it to its historical volatility, KB Financial Group is 2.05 times less risky than Union Materials. It trades about 0.15 of its potential returns per unit of risk. Union Materials Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 221,000 in Union Materials Corp on October 25, 2024 and sell it today you would earn a total of 7,500 from holding Union Materials Corp or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Union Materials Corp
Performance |
| Timeline |
| KB Financial Group |
| Union Materials Corp |
KB Financial and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Union Materials
The main advantage of trading using opposite KB Financial and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Union Materials 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 Union Materials will offset losses from the drop in Union Materials' long position.| KB Financial vs. Hanjoo Light Metal | KB Financial vs. Dong A Steel Technology | KB Financial vs. Youngsin Metal Industrial | KB Financial vs. Shin Steel Co |
| Union Materials vs. Samsung Electronics Co | Union Materials vs. Samsung Electronics Co | Union Materials vs. KB Financial Group | Union Materials vs. Shinhan Financial Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |