Correlation Between Samsung Electronics and KB Financial

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Electronics Co and KB Financial Group, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and KB Financial.

Diversification Opportunities for Samsung Electronics and KB Financial

0.32

Correlation Coefficient

Samsung Electronics  KB Financial

Weak diversification

The 3 months correlation between Samsung and 105560 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co 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 Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and KB Financial go up and down completely randomly.

Pair Corralation between Samsung Electronics and KB Financial

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.69 times more return on investment than KB Financial. However, Samsung Electronics Co is 1.45 times less risky than KB Financial. It trades about -0.02 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.11 per unit of risk. If you would invest  4,711,277  in Samsung Electronics Co on November 20, 2024 and sell it today you would lose (136,277) from holding Samsung Electronics Co or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samsung Electronics Co  vs.  KB Financial Group

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KB Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samsung Electronics and KB Financial

The main advantage of trading using opposite Samsung Electronics and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.

The idea behind Samsung Electronics Co and KB Financial Group 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.