Correlation Between KB Financial and HDFC Bank
Can any of the company-specific risk be diversified away by investing in both KB Financial and HDFC Bank 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 HDFC Bank 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 HDFC Bank Limited, you can compare the effects of market volatilities on KB Financial and HDFC Bank 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 HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and HDFC Bank.
Diversification Opportunities for KB Financial and HDFC Bank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KBIA and HDFC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited 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 HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of KB Financial i.e., KB Financial and HDFC Bank go up and down completely randomly.
Pair Corralation between KB Financial and HDFC Bank
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the HDFC Bank. In addition to that, KB Financial is 1.45 times more volatile than HDFC Bank Limited. It trades about 0.0 of its total potential returns per unit of risk. HDFC Bank Limited is currently generating about 0.09 per unit of volatility. If you would invest 5,800 in HDFC Bank Limited on August 28, 2024 and sell it today you would earn a total of 200.00 from holding HDFC Bank Limited or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. HDFC Bank Limited
Performance |
| Timeline |
| KB Financial Group |
| HDFC Bank Limited |
KB Financial and HDFC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and HDFC Bank
The main advantage of trading using opposite KB Financial and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, HDFC Bank 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 HDFC Bank will offset losses from the drop in HDFC Bank's long position.| KB Financial vs. GOLD ROAD RES | KB Financial vs. ECHO INVESTMENT ZY | KB Financial vs. Air Transport Services | KB Financial vs. TITANIUM TRANSPORTGROUP |
| HDFC Bank vs. EAST SIDE GAMES | HDFC Bank vs. Lifeway Foods | HDFC Bank vs. CONAGRA FOODS | HDFC Bank vs. GAMING FAC SA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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