Correlation Between ECHO INVESTMENT and KB Financial

Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and KB Financial 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 ECHO INVESTMENT and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECHO INVESTMENT ZY and KB Financial Group, you can compare the effects of market volatilities on ECHO INVESTMENT and KB Financial 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 ECHO INVESTMENT with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and KB Financial.

Diversification Opportunities for ECHO INVESTMENT and KB Financial

0.51

Correlation Coefficient

ECHO INVESTMENT  KB Financial

Very weak diversification

The 3 months correlation between ECHO and KBIA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and KB Financial go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and KB Financial

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to under-perform the KB Financial. But the stock apears to be less risky and, when comparing its historical volatility, ECHO INVESTMENT ZY is 1.18 times less risky than KB Financial. The stock trades about -0.03 of its potential returns per unit of risk. The KB Financial Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5,350  in KB Financial Group on December 28, 2024 and sell it today you would lose (200.00) from holding KB Financial Group or give up 3.74% of portfolio value over 90 days.

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

ECHO INVESTMENT ZY  vs.  KB Financial Group

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECHO INVESTMENT ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ECHO INVESTMENT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable forward indicators, KB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ECHO INVESTMENT and KB Financial

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

The idea behind ECHO INVESTMENT ZY and KB Financial Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.