Correlation Between KB Financial and VersaBank
Can any of the company-specific risk be diversified away by investing in both KB Financial and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on KB Financial and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and VersaBank.
Diversification Opportunities for KB Financial and VersaBank
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KB Financial and VersaBank is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of KB Financial i.e., KB Financial and VersaBank go up and down completely randomly.
Pair Corralation between KB Financial and VersaBank
Allowing for the 90-day total investment horizon KB Financial is expected to generate 6.25 times less return on investment than VersaBank. But when comparing it to its historical volatility, KB Financial Group is 1.2 times less risky than VersaBank. It trades about 0.08 of its potential returns per unit of risk. VersaBank is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,482 in VersaBank on August 30, 2024 and sell it today you would earn a total of 312.00 from holding VersaBank or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. VersaBank
Performance |
| Timeline |
| KB Financial Group |
| VersaBank |
KB Financial and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and VersaBank
The main advantage of trading using opposite KB Financial and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank's long position.| KB Financial vs. JPMorgan Chase Co | KB Financial vs. Citigroup | KB Financial vs. Wells Fargo | KB Financial vs. Toronto Dominion Bank |
| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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