Correlation Between Algorand and KB Financial
Can any of the company-specific risk be diversified away by investing in both Algorand and KB Financial 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 Algorand and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algorand and KB Financial Group, you can compare the effects of market volatilities on Algorand and KB Financial 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 Algorand with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and KB Financial.
Diversification Opportunities for Algorand and KB Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Algorand and K1BF34 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Algorand 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 Algorand are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Algorand i.e., Algorand and KB Financial go up and down completely randomly.
Pair Corralation between Algorand and KB Financial
Assuming the 90 days trading horizon Algorand is expected to generate 2.67 times more return on investment than KB Financial. However, Algorand is 2.67 times more volatile than KB Financial Group. It trades about 0.08 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.09 per unit of risk. If you would invest 19.00 in Algorand on October 12, 2024 and sell it today you would earn a total of 15.00 from holding Algorand or generate 78.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.78% |
| Values | Daily Returns |
Algorand vs. KB Financial Group
Performance |
| Timeline |
| Algorand |
| KB Financial Group |
Algorand and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algorand and KB Financial
The main advantage of trading using opposite Algorand and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.The idea behind Algorand and KB Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KB Financial vs. Taiwan Semiconductor Manufacturing | KB Financial vs. Apple Inc | KB Financial vs. Alibaba Group Holding | KB Financial vs. Banco Santander Chile |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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