Correlation Between KB Financial and KT

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

Diversification Opportunities for KB Financial and KT

0.45

Correlation Coefficient

KB Financial  KT

Very weak diversification

The 3 months correlation between 105560 and KT is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation 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 KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of KB Financial i.e., KB Financial and KT go up and down completely randomly.

Pair Corralation between KB Financial and KT

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the KT. In addition to that, KB Financial is 1.51 times more volatile than KT Corporation. It trades about -0.18 of its total potential returns per unit of risk. KT Corporation is currently generating about 0.02 per unit of volatility. If you would invest  4,450,000  in KT Corporation on September 23, 2024 and sell it today you would earn a total of  20,000  from holding KT Corporation or generate 0.45% return on investment over 90 days.

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

KB Financial Group  vs.  KT Corp.

KB Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 1 (%) 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.

KT Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KB Financial and KT

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

The idea behind KB Financial Group and KT Corporation 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.