Correlation Between Credicorp and KB Financial
Can any of the company-specific risk be diversified away by investing in both Credicorp 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 Credicorp and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credicorp and KB Financial Group, you can compare the effects of market volatilities on Credicorp 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 Credicorp with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credicorp and KB Financial.
Diversification Opportunities for Credicorp and KB Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Credicorp and KB Financial is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Credicorp 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 Credicorp 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 Credicorp 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 Credicorp i.e., Credicorp and KB Financial go up and down completely randomly.
Pair Corralation between Credicorp and KB Financial
Considering the 90-day investment horizon Credicorp is expected to under-perform the KB Financial. In addition to that, Credicorp is 1.15 times more volatile than KB Financial Group. It trades about -0.22 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.03 per unit of volatility. If you would invest 5,940 in KB Financial Group on October 14, 2024 and sell it today you would lose (36.00) from holding KB Financial Group or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credicorp vs. KB Financial Group
Performance |
| Timeline |
| Credicorp |
| KB Financial Group |
Credicorp and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credicorp and KB Financial
The main advantage of trading using opposite Credicorp and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credicorp 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.| Credicorp vs. Heritage Financial | Credicorp vs. Home Federal Bancorp | Credicorp vs. Magyar Bancorp | Credicorp vs. National Bankshares |
| KB Financial vs. Banco De Chile | KB Financial vs. Banco Santander Chile | KB Financial vs. Intercorp Financial Services | KB Financial vs. Credicorp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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