Correlation Between KB Financial and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both KB Financial and Northern Graphite 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 Northern Graphite 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 Northern Graphite, you can compare the effects of market volatilities on KB Financial and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Northern Graphite.
Diversification Opportunities for KB Financial and Northern Graphite
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KB Financial and Northern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of KB Financial i.e., KB Financial and Northern Graphite go up and down completely randomly.
Pair Corralation between KB Financial and Northern Graphite
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.22 times more return on investment than Northern Graphite. However, KB Financial Group is 4.55 times less risky than Northern Graphite. It trades about 0.09 of its potential returns per unit of risk. Northern Graphite is currently generating about 0.01 per unit of risk. If you would invest 5,696 in KB Financial Group on August 30, 2024 and sell it today you would earn a total of 1,383 from holding KB Financial Group or generate 24.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Northern Graphite
Performance |
| Timeline |
| KB Financial Group |
| Northern Graphite |
KB Financial and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Northern Graphite
The main advantage of trading using opposite KB Financial and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| KB Financial vs. JPMorgan Chase Co | KB Financial vs. Citigroup | KB Financial vs. Wells Fargo | KB Financial vs. Toronto Dominion Bank |
| Northern Graphite vs. Silver Hammer Mining | Northern Graphite vs. Reyna Silver Corp | Northern Graphite vs. Guanajuato Silver | Northern Graphite vs. Silver One Resources |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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