Correlation Between KB Financial and Alton Sports

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

Diversification Opportunities for KB Financial and Alton Sports

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between 105560 and Alton is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Alton Sports CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alton Sports CoLtd 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 Alton Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alton Sports CoLtd has no effect on the direction of KB Financial i.e., KB Financial and Alton Sports go up and down completely randomly.

Pair Corralation between KB Financial and Alton Sports

Assuming the 90 days trading horizon KB Financial Group is expected to generate 2.27 times more return on investment than Alton Sports. However, KB Financial is 2.27 times more volatile than Alton Sports CoLtd. It trades about 0.02 of its potential returns per unit of risk. Alton Sports CoLtd is currently generating about -0.23 per unit of risk. If you would invest  8,208,836  in KB Financial Group on September 10, 2024 and sell it today you would earn a total of  71,164  from holding KB Financial Group or generate 0.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

KB Financial Group  vs.  Alton Sports CoLtd

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.
Alton Sports CoLtd 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alton Sports CoLtd 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.

KB Financial and Alton Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and Alton Sports

The main advantage of trading using opposite KB Financial and Alton Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Alton Sports 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 Alton Sports will offset losses from the drop in Alton Sports' long position.
The idea behind KB Financial Group and Alton Sports CoLtd 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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