Correlation Between KB Financial and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both KB Financial and Dongwoo Farm 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 Dongwoo Farm 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 Dongwoo Farm To, you can compare the effects of market volatilities on KB Financial and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Dongwoo Farm.
Diversification Opportunities for KB Financial and Dongwoo Farm
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Dongwoo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of KB Financial i.e., KB Financial and Dongwoo Farm go up and down completely randomly.
Pair Corralation between KB Financial and Dongwoo Farm
Assuming the 90 days trading horizon KB Financial Group is expected to generate 2.54 times more return on investment than Dongwoo Farm. However, KB Financial is 2.54 times more volatile than Dongwoo Farm To. It trades about 0.08 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.14 per unit of risk. If you would invest 8,604,919 in KB Financial Group on August 29, 2024 and sell it today you would earn a total of 995,081 from holding KB Financial Group or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Dongwoo Farm To
Performance |
| Timeline |
| KB Financial Group |
| Dongwoo Farm To |
KB Financial and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Dongwoo Farm
The main advantage of trading using opposite KB Financial and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| KB Financial vs. Cube Entertainment | KB Financial vs. Dreamus Company | KB Financial vs. LG Energy Solution | KB Financial vs. Dongwon System |
| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. Wing Yip Food | Dongwoo Farm vs. Busan Industrial Co | Dongwoo Farm vs. Busan Ind |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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