Correlation Between KB Financial and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both KB Financial and SFA Engineering 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 SFA Engineering 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 SFA Engineering, you can compare the effects of market volatilities on KB Financial and SFA Engineering 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 SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and SFA Engineering.
Diversification Opportunities for KB Financial and SFA Engineering
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 105560 and SFA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering 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 SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of KB Financial i.e., KB Financial and SFA Engineering go up and down completely randomly.
Pair Corralation between KB Financial and SFA Engineering
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.15 times more return on investment than SFA Engineering. However, KB Financial is 1.15 times more volatile than SFA Engineering. It trades about 0.1 of its potential returns per unit of risk. SFA Engineering is currently generating about -0.08 per unit of risk. If you would invest 4,500,862 in KB Financial Group on August 27, 2024 and sell it today you would earn a total of 5,339,138 from holding KB Financial Group or generate 118.62% 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. SFA Engineering
Performance |
| Timeline |
| KB Financial Group |
| SFA Engineering |
KB Financial and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and SFA Engineering
The main advantage of trading using opposite KB Financial and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering's long position.| KB Financial vs. Kukil Metal Co | KB Financial vs. Daishin Information Communications | KB Financial vs. Shinsegae Information Communication | KB Financial vs. Display Tech Co |
| SFA Engineering vs. Korea Real Estate | SFA Engineering vs. Korea Ratings Co | SFA Engineering vs. IQuest Co | SFA Engineering vs. Wonbang Tech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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