Correlation Between KB Financial and Celltrion

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

Diversification Opportunities for KB Financial and Celltrion

-0.44

Correlation Coefficient

KB Financial  Celltrion

Very good diversification

The 3 months correlation between 105560 and Celltrion is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Celltrion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion 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 Celltrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion has no effect on the direction of KB Financial i.e., KB Financial and Celltrion go up and down completely randomly.

Pair Corralation between KB Financial and Celltrion

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.38 times more return on investment than Celltrion. However, KB Financial is 1.38 times more volatile than Celltrion. It trades about 0.06 of its potential returns per unit of risk. Celltrion is currently generating about -0.02 per unit of risk. If you would invest  8,040,500  in KB Financial Group on September 26, 2024 and sell it today you would earn a total of  609,500  from holding KB Financial Group or generate 7.58% 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.  Celltrion

KB Financial Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Celltrion

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with KB Financial and Celltrion

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

The idea behind KB Financial Group and Celltrion 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.