Correlation Between KB Financial and NetEase Inc
Can any of the company-specific risk be diversified away by investing in both KB Financial and NetEase Inc 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 NetEase Inc 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 NetEase, you can compare the effects of market volatilities on KB Financial and NetEase Inc 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 NetEase Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and NetEase Inc.
Diversification Opportunities for KB Financial and NetEase Inc
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between KB Financial and NetEase Inc is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase Inc 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 NetEase Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase Inc has no effect on the direction of KB Financial i.e., KB Financial and NetEase Inc go up and down completely randomly.
Pair Corralation between KB Financial and NetEase Inc
Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the NetEase Inc. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 4.76 times less risky than NetEase Inc. The stock trades about -0.12 of its potential returns per unit of risk. The NetEase is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,896 in NetEase on January 4, 2025 and sell it today you would earn a total of 140.00 from holding NetEase or generate 7.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. NetEase
Performance |
| Timeline |
| KB Financial Group |
| NetEase Inc |
KB Financial and NetEase Inc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and NetEase Inc
The main advantage of trading using opposite KB Financial and NetEase Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, NetEase Inc 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 NetEase Inc will offset losses from the drop in NetEase Inc's long position.| KB Financial vs. Shinhan Financial Group | ||
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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