Correlation Between KB Financial and IC Technology

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

Diversification Opportunities for KB Financial and IC Technology

-0.77

Correlation Coefficient

KB Financial  IC Technology

Pay attention - limited upside

The 3 months correlation between 105560 and 052860 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and IC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IC Technology 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 IC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IC Technology has no effect on the direction of KB Financial i.e., KB Financial and IC Technology go up and down completely randomly.

Pair Corralation between KB Financial and IC Technology

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the IC Technology. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.69 times less risky than IC Technology. The stock trades about -0.04 of its potential returns per unit of risk. The IC Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  181,000  in IC Technology Co on December 24, 2024 and sell it today you would earn a total of  9,500  from holding IC Technology Co or generate 5.25% return on investment over 90 days.

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

KB Financial Group  vs.  IC Technology Co

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 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.

IC Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IC Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IC Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with KB Financial and IC Technology

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

The idea behind KB Financial Group and IC Technology Co 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.