Correlation Between KB Financial and Amalgamated Bank
Can any of the company-specific risk be diversified away by investing in both KB Financial and Amalgamated Bank 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 KB Financial and Amalgamated Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KB Financial Group and Amalgamated Bank, you can compare the effects of market volatilities on KB Financial and Amalgamated Bank 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 KB Financial with a short position of Amalgamated Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Amalgamated Bank.
Diversification Opportunities for KB Financial and Amalgamated Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Amalgamated is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Amalgamated Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amalgamated Bank and KB Financial 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 KB Financial Group are associated (or correlated) with Amalgamated Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amalgamated Bank has no effect on the direction of KB Financial i.e., KB Financial and Amalgamated Bank go up and down completely randomly.
Pair Corralation between KB Financial and Amalgamated Bank
Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Amalgamated Bank. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.51 times less risky than Amalgamated Bank. The stock trades about -0.23 of its potential returns per unit of risk. The Amalgamated Bank is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 3,403 in Amalgamated Bank on November 27, 2024 and sell it today you would lose (203.00) from holding Amalgamated Bank or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Amalgamated Bank
Performance |
| Timeline |
| KB Financial Group |
| Amalgamated Bank |
KB Financial and Amalgamated Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Amalgamated Bank
The main advantage of trading using opposite KB Financial and Amalgamated Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Amalgamated Bank 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 Amalgamated Bank will offset losses from the drop in Amalgamated Bank's long position.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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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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