Correlation Between KB Financial and Banco Santander
Can any of the company-specific risk be diversified away by investing in both KB Financial and Banco Santander 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 Banco Santander 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 Banco Santander Brasil, you can compare the effects of market volatilities on KB Financial and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Banco Santander.
Diversification Opportunities for KB Financial and Banco Santander
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KB Financial and Banco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Brasil has no effect on the direction of KB Financial i.e., KB Financial and Banco Santander go up and down completely randomly.
Pair Corralation between KB Financial and Banco Santander
Allowing for the 90-day total investment horizon KB Financial is expected to generate 2.73 times less return on investment than Banco Santander. But when comparing it to its historical volatility, KB Financial Group is 1.78 times less risky than Banco Santander. It trades about 0.13 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 385.00 in Banco Santander Brasil on October 20, 2024 and sell it today you would earn a total of 35.00 from holding Banco Santander Brasil or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
KB Financial Group vs. Banco Santander Brasil
Performance |
| Timeline |
| KB Financial Group |
| Banco Santander Brasil |
KB Financial and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Banco Santander
The main advantage of trading using opposite KB Financial and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| KB Financial vs. JPMorgan Chase Co | KB Financial vs. Citigroup | KB Financial vs. Wells Fargo | KB Financial vs. Toronto Dominion Bank |
| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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