Correlation Between KB Financial and Addtech AB
Can any of the company-specific risk be diversified away by investing in both KB Financial and Addtech AB 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 Addtech AB 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 Addtech AB, you can compare the effects of market volatilities on KB Financial and Addtech AB 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 Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Addtech AB.
Diversification Opportunities for KB Financial and Addtech AB
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KBIA and Addtech is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of KB Financial i.e., KB Financial and Addtech AB go up and down completely randomly.
Pair Corralation between KB Financial and Addtech AB
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.33 times more return on investment than Addtech AB. However, KB Financial is 1.33 times more volatile than Addtech AB. It trades about 0.17 of its potential returns per unit of risk. Addtech AB is currently generating about -0.01 per unit of risk. If you would invest 6,000 in KB Financial Group on September 4, 2024 and sell it today you would earn a total of 550.00 from holding KB Financial Group or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Addtech AB
Performance |
| Timeline |
| KB Financial Group |
| Addtech AB |
KB Financial and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Addtech AB
The main advantage of trading using opposite KB Financial and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| KB Financial vs. KENNAMETAL INC | KB Financial vs. WT OFFSHORE | KB Financial vs. EHEALTH | KB Financial vs. GALENA MINING LTD |
| Addtech AB vs. TROPHY GAMES DEV | Addtech AB vs. Major Drilling Group | Addtech AB vs. SCANSOURCE | Addtech AB vs. Games Workshop Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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