Correlation Between KB Financial and Samsung SDI

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

Diversification Opportunities for KB Financial and Samsung SDI

-0.38

Correlation Coefficient

KB Financial  Samsung SDI

Very good diversification

The 3 months correlation between 105560 and Samsung is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI 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 Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of KB Financial i.e., KB Financial and Samsung SDI go up and down completely randomly.

Pair Corralation between KB Financial and Samsung SDI

Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.87 times more return on investment than Samsung SDI. However, KB Financial Group is 1.15 times less risky than Samsung SDI. It trades about 0.04 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.1 per unit of risk. If you would invest  7,705,018  in KB Financial Group on September 19, 2024 and sell it today you would earn a total of  734,982  from holding KB Financial Group or generate 9.54% return on investment over 90 days.

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

KB Financial Group  vs.  Samsung SDI

KB Financial Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samsung SDI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung SDI 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KB Financial and Samsung SDI

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

The idea behind KB Financial Group and Samsung SDI 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.