Correlation Between KB Financial and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both KB Financial and Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive, you can compare the effects of market volatilities on KB Financial and Colgate Palmolive 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 Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Colgate Palmolive.
Diversification Opportunities for KB Financial and Colgate Palmolive
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KBIA and Colgate is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of KB Financial i.e., KB Financial and Colgate Palmolive go up and down completely randomly.
Pair Corralation between KB Financial and Colgate Palmolive
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Colgate Palmolive. In addition to that, KB Financial is 1.56 times more volatile than Colgate Palmolive. It trades about -0.12 of its total potential returns per unit of risk. Colgate Palmolive is currently generating about 0.07 per unit of volatility. If you would invest 8,409 in Colgate Palmolive on November 28, 2024 and sell it today you would earn a total of 200.00 from holding Colgate Palmolive or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
KB Financial Group vs. Colgate Palmolive
Performance |
| Timeline |
| KB Financial Group |
| Colgate Palmolive |
KB Financial and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Colgate Palmolive
The main advantage of trading using opposite KB Financial and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| KB Financial vs. SEKISUI CHEMICAL | KB Financial vs. CALTAGIRONE EDITORE | KB Financial vs. China BlueChemical | KB Financial vs. Insteel Industries |
| Colgate Palmolive vs. Burlington Stores | Colgate Palmolive vs. Fast Retailing Co | Colgate Palmolive vs. Carsales | Colgate Palmolive vs. Salesforce |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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