Correlation Between KB Financial and Daesung Hi

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

Diversification Opportunities for KB Financial and Daesung Hi

0.28

Correlation Coefficient

KB Financial  Daesung Hi

Modest diversification

The 3 months correlation between 105560 and Daesung is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech 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 Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of KB Financial i.e., KB Financial and Daesung Hi go up and down completely randomly.

Pair Corralation between KB Financial and Daesung Hi

Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.82 times more return on investment than Daesung Hi. However, KB Financial Group is 1.22 times less risky than Daesung Hi. It trades about 0.06 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about -0.09 per unit of risk. If you would invest  8,540,000  in KB Financial Group on October 12, 2024 and sell it today you would earn a total of  130,000  from holding KB Financial Group or generate 1.52% return on investment over 90 days.

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

KB Financial Group  vs.  Daesung Hi Tech Co

KB Financial Group

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Daesung Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daesung Hi Tech Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KB Financial and Daesung Hi

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

The idea behind KB Financial Group and Daesung Hi Tech 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.