Correlation Between KB Financial and Seah Steel

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

Diversification Opportunities for KB Financial and Seah Steel

-0.47

Correlation Coefficient

KB Financial  Seah Steel

Very good diversification

The 3 months correlation between 105560 and Seah is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp 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 Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of KB Financial i.e., KB Financial and Seah Steel go up and down completely randomly.

Pair Corralation between KB Financial and Seah Steel

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Seah Steel. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.19 times less risky than Seah Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Seah Steel Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  17,620,000  in Seah Steel Corp on November 29, 2024 and sell it today you would earn a total of  6,730,000  from holding Seah Steel Corp or generate 38.2% return on investment over 90 days.

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

KB Financial Group  vs.  Seah Steel Corp

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.

Seah Steel Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seah Steel Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seah Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Seah Steel

The main advantage of trading using opposite KB Financial and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.

The idea behind KB Financial Group and Seah Steel Corp 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.