Correlation Between KB Financial and Citizens Holding
Can any of the company-specific risk be diversified away by investing in both KB Financial and Citizens Holding 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 Citizens Holding 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 Citizens Holding, you can compare the effects of market volatilities on KB Financial and Citizens Holding 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 Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Citizens Holding.
Diversification Opportunities for KB Financial and Citizens Holding
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KB Financial and Citizens is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding 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 Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of KB Financial i.e., KB Financial and Citizens Holding go up and down completely randomly.
Pair Corralation between KB Financial and Citizens Holding
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.13 times more return on investment than Citizens Holding. However, KB Financial is 1.13 times more volatile than Citizens Holding. It trades about 0.05 of its potential returns per unit of risk. Citizens Holding is currently generating about -0.12 per unit of risk. If you would invest 4,033 in KB Financial Group on November 2, 2024 and sell it today you would earn a total of 2,212 from holding KB Financial Group or generate 54.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.67% |
| Values | Daily Returns |
KB Financial Group vs. Citizens Holding
Performance |
| Timeline |
| KB Financial Group |
| Citizens Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
KB Financial and Citizens Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Citizens Holding
The main advantage of trading using opposite KB Financial and Citizens Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Citizens Holding 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 Citizens Holding will offset losses from the drop in Citizens Holding'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 |
| Citizens Holding vs. Home Federal Bancorp | Citizens Holding vs. Lake Shore Bancorp | Citizens Holding vs. Community West Bancshares | Citizens Holding vs. Magyar Bancorp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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