Correlation Between KB Financial and Banc Of
Can any of the company-specific risk be diversified away by investing in both KB Financial and Banc Of 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 Banc Of 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 Banc of California, you can compare the effects of market volatilities on KB Financial and Banc Of 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 Banc Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Banc Of.
Diversification Opportunities for KB Financial and Banc Of
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KB Financial and Banc is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Banc of California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California 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 Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California has no effect on the direction of KB Financial i.e., KB Financial and Banc Of go up and down completely randomly.
Pair Corralation between KB Financial and Banc Of
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 3.21 times more return on investment than Banc Of. However, KB Financial is 3.21 times more volatile than Banc of California. It trades about 0.09 of its potential returns per unit of risk. Banc of California is currently generating about 0.1 per unit of risk. If you would invest 3,573 in KB Financial Group on November 9, 2024 and sell it today you would earn a total of 2,329 from holding KB Financial Group or generate 65.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Banc of California
Performance |
| Timeline |
| KB Financial Group |
| Banc of California |
KB Financial and Banc Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Banc Of
The main advantage of trading using opposite KB Financial and Banc Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Banc Of 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 Banc Of will offset losses from the drop in Banc Of'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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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