Correlation Between KB Financial and Varta AG
Can any of the company-specific risk be diversified away by investing in both KB Financial and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on KB Financial and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Varta AG.
Diversification Opportunities for KB Financial and Varta AG
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBIA and Varta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of KB Financial i.e., KB Financial and Varta AG go up and down completely randomly.
Pair Corralation between KB Financial and Varta AG
Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.39 times more return on investment than Varta AG. However, KB Financial Group is 2.53 times less risky than Varta AG. It trades about 0.04 of its potential returns per unit of risk. Varta AG is currently generating about -0.27 per unit of risk. If you would invest 6,550 in KB Financial Group on August 28, 2024 and sell it today you would earn a total of 100.00 from holding KB Financial Group or generate 1.53% 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. Varta AG
Performance |
| Timeline |
| KB Financial Group |
| Varta AG |
KB Financial and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Varta AG
The main advantage of trading using opposite KB Financial and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG'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 |
| Varta AG vs. CHINA EDUCATION GROUP | Varta AG vs. IDP EDUCATION LTD | Varta AG vs. TAL Education Group | Varta AG vs. DEVRY EDUCATION GRP |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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