Correlation Between KB Financial and SCCB

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Can any of the company-specific risk be diversified away by investing in both KB Financial and SCCB 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 SCCB 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 SCCB, you can compare the effects of market volatilities on KB Financial and SCCB 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 SCCB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and SCCB.

Diversification Opportunities for KB Financial and SCCB

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between KB Financial and SCCB is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and SCCB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCCB 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 SCCB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCCB has no effect on the direction of KB Financial i.e., KB Financial and SCCB go up and down completely randomly.

Pair Corralation between KB Financial and SCCB

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 4.41 times more return on investment than SCCB. However, KB Financial is 4.41 times more volatile than SCCB. It trades about 0.06 of its potential returns per unit of risk. SCCB is currently generating about 0.07 per unit of risk. If you would invest  4,239  in KB Financial Group on August 31, 2024 and sell it today you would earn a total of  2,840  from holding KB Financial Group or generate 67.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy77.78%
ValuesDaily Returns

KB Financial Group  vs.  SCCB

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.
SCCB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SCCB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, SCCB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

KB Financial and SCCB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and SCCB

The main advantage of trading using opposite KB Financial and SCCB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, SCCB 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 SCCB will offset losses from the drop in SCCB's long position.
The idea behind KB Financial Group and SCCB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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