Correlation Between Lloyds Banking and KB Financial
Can any of the company-specific risk be diversified away by investing in both Lloyds Banking and KB Financial 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 Lloyds Banking and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lloyds Banking Group and KB Financial Group, you can compare the effects of market volatilities on Lloyds Banking and KB Financial 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 Lloyds Banking with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lloyds Banking and KB Financial.
Diversification Opportunities for Lloyds Banking and KB Financial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lloyds and KBIA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lloyds Banking Group and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Lloyds Banking 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 Lloyds Banking Group are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Lloyds Banking i.e., Lloyds Banking and KB Financial go up and down completely randomly.
Pair Corralation between Lloyds Banking and KB Financial
Assuming the 90 days trading horizon Lloyds Banking Group is expected to under-perform the KB Financial. In addition to that, Lloyds Banking is 1.45 times more volatile than KB Financial Group. It trades about -0.1 of its total potential returns per unit of risk. KB Financial Group is currently generating about 0.12 per unit of volatility. If you would invest 6,200 in KB Financial Group on August 25, 2024 and sell it today you would earn a total of 450.00 from holding KB Financial Group or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lloyds Banking Group vs. KB Financial Group
Performance |
| Timeline |
| Lloyds Banking Group |
| KB Financial Group |
Lloyds Banking and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lloyds Banking and KB Financial
The main advantage of trading using opposite Lloyds Banking and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lloyds Banking position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.| Lloyds Banking vs. HYATT HOTELS A | Lloyds Banking vs. Park Hotels Resorts | Lloyds Banking vs. MELIA HOTELS | Lloyds Banking vs. Fidelity National Information |
| KB Financial vs. HDFC Bank Limited | KB Financial vs. PT Bank Central | KB Financial vs. DBS Group Holdings | KB Financial vs. State Bank of |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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