Correlation Between KB Financial and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both KB Financial and Magyar Bancorp 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 Magyar Bancorp 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 Magyar Bancorp, you can compare the effects of market volatilities on KB Financial and Magyar Bancorp 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 Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Magyar Bancorp.
Diversification Opportunities for KB Financial and Magyar Bancorp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Magyar is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of KB Financial i.e., KB Financial and Magyar Bancorp go up and down completely randomly.
Pair Corralation between KB Financial and Magyar Bancorp
Allowing for the 90-day total investment horizon KB Financial is expected to generate 5.56 times less return on investment than Magyar Bancorp. In addition to that, KB Financial is 1.65 times more volatile than Magyar Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about 0.63 per unit of volatility. If you would invest 1,226 in Magyar Bancorp on August 31, 2024 and sell it today you would earn a total of 192.00 from holding Magyar Bancorp or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Magyar Bancorp
Performance |
| Timeline |
| KB Financial Group |
| Magyar Bancorp |
KB Financial and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Magyar Bancorp
The main advantage of trading using opposite KB Financial and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Magyar Bancorp 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp'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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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