Correlation Between KB Financial and First Tractor
Can any of the company-specific risk be diversified away by investing in both KB Financial and First Tractor 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 First Tractor 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 First Tractor Co, you can compare the effects of market volatilities on KB Financial and First Tractor 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 First Tractor. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and First Tractor.
Diversification Opportunities for KB Financial and First Tractor
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KB Financial and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and First Tractor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor 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 First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of KB Financial i.e., KB Financial and First Tractor go up and down completely randomly.
Pair Corralation between KB Financial and First Tractor
If you would invest 6,524 in KB Financial Group on September 1, 2024 and sell it today you would earn a total of 369.00 from holding KB Financial Group or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
KB Financial Group vs. First Tractor Co
Performance |
| Timeline |
| KB Financial Group |
| First Tractor |
KB Financial and First Tractor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and First Tractor
The main advantage of trading using opposite KB Financial and First Tractor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, First Tractor 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 First Tractor will offset losses from the drop in First Tractor's long position.| KB Financial vs. Banco Santander Brasil | KB Financial vs. CrossFirst Bankshares | KB Financial vs. Banco Bradesco SA | KB Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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