Correlation Between KB Financial and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both KB Financial and Falcon Metals 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 Falcon Metals 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 Falcon Metals Limited, you can compare the effects of market volatilities on KB Financial and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Falcon Metals.
Diversification Opportunities for KB Financial and Falcon Metals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KB Financial and Falcon is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Falcon Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals Limited 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals Limited has no effect on the direction of KB Financial i.e., KB Financial and Falcon Metals go up and down completely randomly.
Pair Corralation between KB Financial and Falcon Metals
Allowing for the 90-day total investment horizon KB Financial is expected to generate 13.92 times less return on investment than Falcon Metals. But when comparing it to its historical volatility, KB Financial Group is 24.33 times less risky than Falcon Metals. It trades about 0.09 of its potential returns per unit of risk. Falcon Metals Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Falcon Metals Limited on August 31, 2024 and sell it today you would lose (4.50) from holding Falcon Metals Limited or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
KB Financial Group vs. Falcon Metals Limited
Performance |
| Timeline |
| KB Financial Group |
| Falcon Metals Limited |
KB Financial and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Falcon Metals
The main advantage of trading using opposite KB Financial and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' 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 |
| Falcon Metals vs. Aurion Resources | Falcon Metals vs. Rio2 Limited | Falcon Metals vs. Palamina Corp | Falcon Metals vs. BTU Metals Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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