Correlation Between KB Financial and UIL
Can any of the company-specific risk be diversified away by investing in both KB Financial and UIL 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 UIL 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 UIL Co, you can compare the effects of market volatilities on KB Financial and UIL 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 UIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and UIL.
Diversification Opportunities for KB Financial and UIL
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 105560 and UIL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and UIL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UIL Co 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 UIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UIL Co has no effect on the direction of KB Financial i.e., KB Financial and UIL go up and down completely randomly.
Pair Corralation between KB Financial and UIL
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the UIL. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.23 times less risky than UIL. The stock trades about -0.1 of its potential returns per unit of risk. The UIL Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 473,000 in UIL Co on September 13, 2024 and sell it today you would earn a total of 44,000 from holding UIL Co or generate 9.3% 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. UIL Co
Performance |
| Timeline |
| KB Financial Group |
| UIL Co |
KB Financial and UIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and UIL
The main advantage of trading using opposite KB Financial and UIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, UIL 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 UIL will offset losses from the drop in UIL's long position.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Hana Financial | KB Financial vs. Woori Financial Group | KB Financial vs. Samsung Electronics Co |
| UIL vs. Kbi Metal Co | UIL vs. KakaoBank Corp | UIL vs. Lotte Non Life Insurance | UIL vs. iNtRON Biotechnology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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