Correlation Between Fast Retailing and KB Financial
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and KB Financial Group, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and KB Financial.
Diversification Opportunities for Fast Retailing and KB Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fast and KBIA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co 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 Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and KB Financial go up and down completely randomly.
Pair Corralation between Fast Retailing and KB Financial
Assuming the 90 days trading horizon Fast Retailing Co is expected to generate 0.73 times more return on investment than KB Financial. However, Fast Retailing Co is 1.38 times less risky than KB Financial. It trades about 0.2 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.12 per unit of risk. If you would invest 29,410 in Fast Retailing Co on September 1, 2024 and sell it today you would earn a total of 2,420 from holding Fast Retailing Co or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Retailing Co vs. KB Financial Group
Performance |
| Timeline |
| Fast Retailing |
| KB Financial Group |
Fast Retailing and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and KB Financial
The main advantage of trading using opposite Fast Retailing and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. SIVERS SEMICONDUCTORS AB | Fast Retailing vs. Darden Restaurants | Fast Retailing vs. Reliance Steel Aluminum | Fast Retailing vs. Q2M Managementberatung AG |
| KB Financial vs. Fast Retailing Co | KB Financial vs. SALESFORCE INC CDR | KB Financial vs. AGRICULTBK HADR25 YC | KB Financial vs. Dairy Farm International |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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