Correlation Between KB Financial and Digital Realty
Can any of the company-specific risk be diversified away by investing in both KB Financial and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on KB Financial and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Digital Realty.
Diversification Opportunities for KB Financial and Digital Realty
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBIA and Digital is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of KB Financial i.e., KB Financial and Digital Realty go up and down completely randomly.
Pair Corralation between KB Financial and Digital Realty
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Digital Realty. In addition to that, KB Financial is 2.12 times more volatile than Digital Realty Trust. It trades about -0.16 of its total potential returns per unit of risk. Digital Realty Trust is currently generating about 0.17 per unit of volatility. If you would invest 17,348 in Digital Realty Trust on September 12, 2024 and sell it today you would earn a total of 854.00 from holding Digital Realty Trust or generate 4.92% 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. Digital Realty Trust
Performance |
| Timeline |
| KB Financial Group |
| Digital Realty Trust |
KB Financial and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Digital Realty
The main advantage of trading using opposite KB Financial and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| KB Financial vs. China Merchants Bank | KB Financial vs. HDFC Bank Limited | KB Financial vs. ICICI Bank Limited | KB Financial vs. PT Bank Central |
| Digital Realty vs. ORIX JREIT INC | Digital Realty vs. Superior Plus Corp | Digital Realty vs. SIVERS SEMICONDUCTORS AB | Digital Realty vs. Norsk Hydro ASA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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