Correlation Between KB Financial and Unilever Plc

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Can any of the company-specific risk be diversified away by investing in both KB Financial and Unilever Plc 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 Unilever Plc 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 Unilever Plc, you can compare the effects of market volatilities on KB Financial and Unilever Plc 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 Unilever Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Unilever Plc.

Diversification Opportunities for KB Financial and Unilever Plc

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between KBIA and Unilever is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Unilever Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Plc 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 Unilever Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Plc has no effect on the direction of KB Financial i.e., KB Financial and Unilever Plc go up and down completely randomly.

Pair Corralation between KB Financial and Unilever Plc

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Unilever Plc. In addition to that, KB Financial is 1.66 times more volatile than Unilever Plc. It trades about -0.12 of its total potential returns per unit of risk. Unilever Plc is currently generating about -0.09 per unit of volatility. If you would invest  5,532  in Unilever Plc on November 28, 2024 and sell it today you would lose (176.00) from holding Unilever Plc or give up 3.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

KB Financial Group  vs.  Unilever Plc

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Unilever Plc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Unilever Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Unilever Plc is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

KB Financial and Unilever Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and Unilever Plc

The main advantage of trading using opposite KB Financial and Unilever Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Unilever Plc 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 Unilever Plc will offset losses from the drop in Unilever Plc's long position.
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The idea behind KB Financial Group and Unilever Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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