Correlation Between KB Financial and NAU IB

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

Diversification Opportunities for KB Financial and NAU IB

0.05

Correlation Coefficient

KB Financial  NAU IB

Significant diversification

The 3 months correlation between 105560 and NAU is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and NAU IB Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAU IB Capital 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 NAU IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAU IB Capital has no effect on the direction of KB Financial i.e., KB Financial and NAU IB go up and down completely randomly.

Pair Corralation between KB Financial and NAU IB

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the NAU IB. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 3.25 times less risky than NAU IB. The stock trades about -0.04 of its potential returns per unit of risk. The NAU IB Capital is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  121,498  in NAU IB Capital on December 24, 2024 and sell it today you would lose (12,298) from holding NAU IB Capital or give up 10.12% of portfolio value over 90 days.

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

KB Financial Group  vs.  NAU IB Capital

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.

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NAU IB 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 NAU IB

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

The idea behind KB Financial Group and NAU IB Capital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.