Correlation Between KakaoBank Corp and Settlebank
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and Settlebank 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 KakaoBank Corp and Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and Settlebank, you can compare the effects of market volatilities on KakaoBank Corp and Settlebank 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 KakaoBank Corp with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and Settlebank.
Diversification Opportunities for KakaoBank Corp and Settlebank
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KakaoBank and Settlebank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and Settlebank go up and down completely randomly.
Pair Corralation between KakaoBank Corp and Settlebank
Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.89 times more return on investment than Settlebank. However, KakaoBank Corp is 1.13 times less risky than Settlebank. It trades about 0.04 of its potential returns per unit of risk. Settlebank is currently generating about -0.08 per unit of risk. If you would invest 2,170,000 in KakaoBank Corp on September 24, 2024 and sell it today you would earn a total of 40,000 from holding KakaoBank Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. Settlebank
Performance |
| Timeline |
| KakaoBank Corp |
| Settlebank |
KakaoBank Corp and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and Settlebank
The main advantage of trading using opposite KakaoBank Corp and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |