Correlation Between Banco Santander and KB Financial
Can any of the company-specific risk be diversified away by investing in both Banco Santander 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 Banco Santander and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Santander Brasil and KB Financial Group, you can compare the effects of market volatilities on Banco Santander 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 Banco Santander with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Santander and KB Financial.
Diversification Opportunities for Banco Santander and KB Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banco and KB Financial is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Banco Santander Brasil 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 Banco Santander 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 Banco Santander Brasil 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 Banco Santander i.e., Banco Santander and KB Financial go up and down completely randomly.
Pair Corralation between Banco Santander and KB Financial
Given the investment horizon of 90 days Banco Santander Brasil is expected to under-perform the KB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Banco Santander Brasil is 1.31 times less risky than KB Financial. The stock trades about -0.03 of its potential returns per unit of risk. The KB Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,480 in KB Financial Group on August 28, 2024 and sell it today you would earn a total of 3,496 from holding KB Financial Group or generate 100.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Santander Brasil vs. KB Financial Group
Performance |
| Timeline |
| Banco Santander Brasil |
| KB Financial Group |
Banco Santander and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Santander and KB Financial
The main advantage of trading using opposite Banco Santander and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Santander 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.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
| KB Financial vs. Banco Santander Brasil | KB Financial vs. CrossFirst Bankshares | KB Financial vs. Banco Bradesco SA | KB Financial vs. CF Bankshares |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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