Correlation Between KB Financial and OceanFirst Financial
Can any of the company-specific risk be diversified away by investing in both KB Financial and OceanFirst Financial 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 OceanFirst Financial 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 OceanFirst Financial Corp, you can compare the effects of market volatilities on KB Financial and OceanFirst Financial 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 OceanFirst Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and OceanFirst Financial.
Diversification Opportunities for KB Financial and OceanFirst Financial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KB Financial and OceanFirst is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and OceanFirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanFirst Financial Corp 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 OceanFirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanFirst Financial Corp has no effect on the direction of KB Financial i.e., KB Financial and OceanFirst Financial go up and down completely randomly.
Pair Corralation between KB Financial and OceanFirst Financial
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 7.91 times more return on investment than OceanFirst Financial. However, KB Financial is 7.91 times more volatile than OceanFirst Financial Corp. It trades about 0.04 of its potential returns per unit of risk. OceanFirst Financial Corp is currently generating about 0.16 per unit of risk. If you would invest 5,414 in KB Financial Group on January 2, 2025 and sell it today you would earn a total of 50.00 from holding KB Financial Group or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. OceanFirst Financial Corp
Performance |
| Timeline |
| KB Financial Group |
| OceanFirst Financial Corp |
KB Financial and OceanFirst Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and OceanFirst Financial
The main advantage of trading using opposite KB Financial and OceanFirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, OceanFirst Financial 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 OceanFirst Financial will offset losses from the drop in OceanFirst Financial'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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