Correlation Between KB Financial and St James’s
Can any of the company-specific risk be diversified away by investing in both KB Financial and St James’s 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 St James’s 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 St Jamess Place, you can compare the effects of market volatilities on KB Financial and St James’s 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 St James’s. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and St James’s.
Diversification Opportunities for KB Financial and St James’s
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBIA and 1IV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and St Jamess Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Jamess Place 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 St James’s. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Jamess Place has no effect on the direction of KB Financial i.e., KB Financial and St James’s go up and down completely randomly.
Pair Corralation between KB Financial and St James’s
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the St James’s. In addition to that, KB Financial is 1.77 times more volatile than St Jamess Place. It trades about -0.07 of its total potential returns per unit of risk. St Jamess Place is currently generating about 0.17 per unit of volatility. If you would invest 1,007 in St Jamess Place on September 13, 2024 and sell it today you would earn a total of 66.00 from holding St Jamess Place or generate 6.55% 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. St Jamess Place
Performance |
| Timeline |
| KB Financial Group |
| St Jamess Place |
KB Financial and St James’s Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and St James’s
The main advantage of trading using opposite KB Financial and St James’s positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, St James’s 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 St James’s will offset losses from the drop in St James’s' long position.| KB Financial vs. Elmos Semiconductor SE | KB Financial vs. TRADEGATE | KB Financial vs. CANON MARKETING JP | KB Financial vs. MARKET VECTR RETAIL |
| St James’s vs. Cogent Communications Holdings | St James’s vs. Mobilezone Holding AG | St James’s vs. Digilife Technologies Limited | St James’s vs. ACCSYS TECHPLC EO |
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 Stocks Directory module to find actively traded stocks across global markets.
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