Correlation Between KB Financial and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both KB Financial and Lynas Rare 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 Lynas Rare 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 Lynas Rare Earths, you can compare the effects of market volatilities on KB Financial and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Lynas Rare.
Diversification Opportunities for KB Financial and Lynas Rare
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Lynas is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of KB Financial i.e., KB Financial and Lynas Rare go up and down completely randomly.
Pair Corralation between KB Financial and Lynas Rare
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.85 times more return on investment than Lynas Rare. However, KB Financial Group is 1.18 times less risky than Lynas Rare. It trades about 0.05 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.02 per unit of risk. If you would invest 4,170 in KB Financial Group on October 25, 2024 and sell it today you would earn a total of 2,029 from holding KB Financial Group or generate 48.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
KB Financial Group vs. Lynas Rare Earths
Performance |
| Timeline |
| KB Financial Group |
| Lynas Rare Earths |
KB Financial and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Lynas Rare
The main advantage of trading using opposite KB Financial and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare'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 |
| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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