Correlation Between KB Financial and Sovereign Metals
Can any of the company-specific risk be diversified away by investing in both KB Financial and Sovereign Metals 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 Sovereign Metals 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 Sovereign Metals Limited, you can compare the effects of market volatilities on KB Financial and Sovereign Metals 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 Sovereign Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Sovereign Metals.
Diversification Opportunities for KB Financial and Sovereign Metals
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Sovereign is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Sovereign Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals 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 Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of KB Financial i.e., KB Financial and Sovereign Metals go up and down completely randomly.
Pair Corralation between KB Financial and Sovereign Metals
Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Sovereign Metals. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 2.07 times less risky than Sovereign Metals. The stock trades about -0.07 of its potential returns per unit of risk. The Sovereign Metals Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Sovereign Metals Limited on October 26, 2024 and sell it today you would lose (1.00) from holding Sovereign Metals Limited or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
KB Financial Group vs. Sovereign Metals Limited
Performance |
| Timeline |
| KB Financial Group |
| Sovereign Metals |
KB Financial and Sovereign Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Sovereign Metals
The main advantage of trading using opposite KB Financial and Sovereign Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Sovereign Metals 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 Sovereign Metals will offset losses from the drop in Sovereign Metals' long position.| KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
| Sovereign Metals vs. Rockridge Resources | Sovereign Metals vs. Filo Mining Corp | Sovereign Metals vs. Tearlach Resources Limited | Sovereign Metals vs. Callinex Mines |
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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