Correlation Between Federal Home and KB Financial
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and KB Financial Group, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and KB Financial.
Diversification Opportunities for Federal Home and KB Financial
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and KBIA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan 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 Federal Home 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 Federal Home Loan 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 Federal Home i.e., Federal Home and KB Financial go up and down completely randomly.
Pair Corralation between Federal Home and KB Financial
Assuming the 90 days horizon Federal Home Loan is expected to generate 2.55 times more return on investment than KB Financial. However, Federal Home is 2.55 times more volatile than KB Financial Group. It trades about 0.27 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 104.00 in Federal Home Loan on August 28, 2024 and sell it today you would earn a total of 190.00 from holding Federal Home Loan or generate 182.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. KB Financial Group
Performance |
| Timeline |
| Federal Home Loan |
| KB Financial Group |
Federal Home and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and KB Financial
The main advantage of trading using opposite Federal Home and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. Origin Agritech | Federal Home vs. SIVERS SEMICONDUCTORS AB |
| KB Financial vs. GOLD ROAD RES | KB Financial vs. ECHO INVESTMENT ZY | KB Financial vs. Air Transport Services | KB Financial vs. TITANIUM TRANSPORTGROUP |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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