Correlation Between Xtrackers ShortDAX and KB Financial

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

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

Diversification Opportunities for Xtrackers ShortDAX and KB Financial

0.65

Correlation Coefficient

Xtrackers ShortDAX  KB Financial

Poor diversification

The 3 months correlation between Xtrackers and KBIA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Xtrackers ShortDAX i.e., Xtrackers ShortDAX and KB Financial go up and down completely randomly.

Pair Corralation between Xtrackers ShortDAX and KB Financial

Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to under-perform the KB Financial. In addition to that, Xtrackers ShortDAX is 1.09 times more volatile than KB Financial Group. It trades about -0.17 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.05 per unit of volatility. If you would invest  5,350  in KB Financial Group on December 30, 2024 and sell it today you would lose (350.00) from holding KB Financial Group or give up 6.54% of portfolio value over 90 days.

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

Xtrackers ShortDAX  vs.  KB Financial Group

Xtrackers ShortDAX

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xtrackers ShortDAX and KB Financial

The main advantage of trading using opposite Xtrackers ShortDAX and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.