Correlation Between KB Financial and Sumitomo Mitsui

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

Diversification Opportunities for KB Financial and Sumitomo Mitsui

KB FinancialSumitomoDiversified AwayKB FinancialSumitomoDiversified Away100%
-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between KB Financial and Sumitomo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of KB Financial i.e., KB Financial and Sumitomo Mitsui go up and down completely randomly.

Pair Corralation between KB Financial and Sumitomo Mitsui

Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Sumitomo Mitsui. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 4.69 times less risky than Sumitomo Mitsui. The stock trades about -0.44 of its potential returns per unit of risk. The Sumitomo Mitsui Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,354  in Sumitomo Mitsui Financial on November 21, 2024 and sell it today you would earn a total of  254.00  from holding Sumitomo Mitsui Financial or generate 10.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KB Financial Group  vs.  Sumitomo Mitsui Financial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15KB SMFNF
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb565860626466687072
Sumitomo Mitsui Financial 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sumitomo Mitsui Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sumitomo Mitsui reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb222324252627

KB Financial and Sumitomo Mitsui Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.33-2.49-1.66-0.820.00.741.482.222.96 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15KB SMFNF
       Returns  

Pair Trading with KB Financial and Sumitomo Mitsui

The main advantage of trading using opposite KB Financial and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.
The idea behind KB Financial Group and Sumitomo Mitsui Financial 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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