Correlation Between KB Financial and RBB Bancorp
Can any of the company-specific risk be diversified away by investing in both KB Financial and RBB 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 RBB 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 RBB Bancorp, you can compare the effects of market volatilities on KB Financial and RBB 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 RBB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and RBB Bancorp.
Diversification Opportunities for KB Financial and RBB Bancorp
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KB Financial and RBB is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and RBB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBB 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 RBB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBB Bancorp has no effect on the direction of KB Financial i.e., KB Financial and RBB Bancorp go up and down completely randomly.
Pair Corralation between KB Financial and RBB Bancorp
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.37 times more return on investment than RBB Bancorp. However, KB Financial is 1.37 times more volatile than RBB Bancorp. It trades about -0.07 of its potential returns per unit of risk. RBB Bancorp is currently generating about -0.24 per unit of risk. If you would invest 6,189 in KB Financial Group on January 16, 2025 and sell it today you would lose (718.00) from holding KB Financial Group or give up 11.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. RBB Bancorp
Performance |
| Timeline |
| KB Financial Group |
| RBB Bancorp |
KB Financial and RBB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and RBB Bancorp
The main advantage of trading using opposite KB Financial and RBB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, RBB 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 RBB Bancorp will offset losses from the drop in RBB Bancorp'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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