Correlation Between KB Financial and Lotte Data
Can any of the company-specific risk be diversified away by investing in both KB Financial and Lotte Data 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 Lotte Data 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 Lotte Data Communication, you can compare the effects of market volatilities on KB Financial and Lotte Data 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 Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Lotte Data.
Diversification Opportunities for KB Financial and Lotte Data
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 105560 and Lotte is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of KB Financial i.e., KB Financial and Lotte Data go up and down completely randomly.
Pair Corralation between KB Financial and Lotte Data
Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.72 times more return on investment than Lotte Data. However, KB Financial Group is 1.39 times less risky than Lotte Data. It trades about 0.0 of its potential returns per unit of risk. Lotte Data Communication is currently generating about -0.19 per unit of risk. If you would invest 9,620,000 in KB Financial Group on August 29, 2024 and sell it today you would lose (20,000) from holding KB Financial Group or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Lotte Data Communication
Performance |
| Timeline |
| KB Financial Group |
| Lotte Data Communication |
KB Financial and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Lotte Data
The main advantage of trading using opposite KB Financial and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Lotte Data 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 Lotte Data will offset losses from the drop in Lotte Data's long position.| KB Financial vs. Korea New Network | KB Financial vs. Dong A Eltek | KB Financial vs. Dreamus Company | KB Financial vs. SK Bioscience Co |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Daou Tech | Lotte Data vs. KT Corporation | Lotte Data vs. Samsung Heavy Industries |
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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