Correlation Between KB Financial and HSD Engine
Can any of the company-specific risk be diversified away by investing in both KB Financial and HSD Engine 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 HSD Engine 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 HSD Engine Co, you can compare the effects of market volatilities on KB Financial and HSD Engine 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 HSD Engine. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and HSD Engine.
Diversification Opportunities for KB Financial and HSD Engine
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 105560 and HSD is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and HSD Engine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSD Engine 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 HSD Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSD Engine has no effect on the direction of KB Financial i.e., KB Financial and HSD Engine go up and down completely randomly.
Pair Corralation between KB Financial and HSD Engine
Assuming the 90 days trading horizon KB Financial is expected to generate 3.72 times less return on investment than HSD Engine. But when comparing it to its historical volatility, KB Financial Group is 1.85 times less risky than HSD Engine. It trades about 0.11 of its potential returns per unit of risk. HSD Engine Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,421,000 in HSD Engine Co on August 31, 2024 and sell it today you would earn a total of 246,000 from holding HSD Engine Co or generate 17.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. HSD Engine Co
Performance |
| Timeline |
| KB Financial Group |
| HSD Engine |
KB Financial and HSD Engine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and HSD Engine
The main advantage of trading using opposite KB Financial and HSD Engine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, HSD Engine 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 HSD Engine will offset losses from the drop in HSD Engine's long position.| KB Financial vs. Inzi Display CoLtd | KB Financial vs. Samsung Publishing Co | KB Financial vs. Pan Entertainment Co | KB Financial vs. Kaonmedia Co |
| HSD Engine vs. DSC Investment | HSD Engine vs. Sangsangin Investment Securities | HSD Engine vs. Eagle Veterinary Technology | HSD Engine vs. EBEST Investment Securities |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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