Correlation Between KB Financial and Erste Group
Can any of the company-specific risk be diversified away by investing in both KB Financial and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on KB Financial and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Erste Group.
Diversification Opportunities for KB Financial and Erste Group
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KB Financial and Erste is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of KB Financial i.e., KB Financial and Erste Group go up and down completely randomly.
Pair Corralation between KB Financial and Erste Group
Allowing for the 90-day total investment horizon KB Financial is expected to generate 10.13 times less return on investment than Erste Group. But when comparing it to its historical volatility, KB Financial Group is 1.15 times less risky than Erste Group. It trades about 0.02 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,874 in Erste Group Bank on October 9, 2024 and sell it today you would earn a total of 136.00 from holding Erste Group Bank or generate 4.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KB Financial Group vs. Erste Group Bank
Performance |
Timeline |
KB Financial Group |
Erste Group Bank |
KB Financial and Erste Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KB Financial and Erste Group
The main advantage of trading using opposite KB Financial and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group'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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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