Correlation Between KB Financial and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both KB Financial and AerCap Holdings 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 AerCap Holdings 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 AerCap Holdings NV, you can compare the effects of market volatilities on KB Financial and AerCap Holdings 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 AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and AerCap Holdings.
Diversification Opportunities for KB Financial and AerCap Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KBIA and AerCap is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV 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 AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of KB Financial i.e., KB Financial and AerCap Holdings go up and down completely randomly.
Pair Corralation between KB Financial and AerCap Holdings
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.64 times more return on investment than AerCap Holdings. However, KB Financial is 1.64 times more volatile than AerCap Holdings NV. It trades about 0.09 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.1 per unit of risk. If you would invest 3,208 in KB Financial Group on September 1, 2024 and sell it today you would earn a total of 3,392 from holding KB Financial Group or generate 105.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
KB Financial Group vs. AerCap Holdings NV
Performance |
| Timeline |
| KB Financial Group |
| AerCap Holdings NV |
KB Financial and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and AerCap Holdings
The main advantage of trading using opposite KB Financial and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.| KB Financial vs. Fast Retailing Co | KB Financial vs. SALESFORCE INC CDR | KB Financial vs. AGRICULTBK HADR25 YC | KB Financial vs. Dairy Farm International |
| AerCap Holdings vs. PT Bank Maybank | AerCap Holdings vs. LION ONE METALS | AerCap Holdings vs. CDN IMPERIAL BANK | AerCap Holdings vs. Chiba Bank |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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