Correlation Between KB Financial and AIR LIQUIDE
Can any of the company-specific risk be diversified away by investing in both KB Financial and AIR LIQUIDE 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 AIR LIQUIDE 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 AIR LIQUIDE ADR, you can compare the effects of market volatilities on KB Financial and AIR LIQUIDE 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 AIR LIQUIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and AIR LIQUIDE.
Diversification Opportunities for KB Financial and AIR LIQUIDE
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KBIA and AIR is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR 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 AIR LIQUIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR LIQUIDE ADR has no effect on the direction of KB Financial i.e., KB Financial and AIR LIQUIDE go up and down completely randomly.
Pair Corralation between KB Financial and AIR LIQUIDE
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.4 times more return on investment than AIR LIQUIDE. However, KB Financial is 1.4 times more volatile than AIR LIQUIDE ADR. It trades about 0.09 of its potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.02 per unit of risk. If you would invest 3,171 in KB Financial Group on August 31, 2024 and sell it today you would earn a total of 3,479 from holding KB Financial Group or generate 109.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
KB Financial Group vs. AIR LIQUIDE ADR
Performance |
| Timeline |
| KB Financial Group |
| AIR LIQUIDE ADR |
KB Financial and AIR LIQUIDE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and AIR LIQUIDE
The main advantage of trading using opposite KB Financial and AIR LIQUIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, AIR LIQUIDE 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 AIR LIQUIDE will offset losses from the drop in AIR LIQUIDE's long position.The idea behind KB Financial Group and AIR LIQUIDE ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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