Correlation Between JAPAN TOBACCO and KB Financial
Can any of the company-specific risk be diversified away by investing in both JAPAN TOBACCO 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 JAPAN TOBACCO and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN TOBACCO UNSPADR12 and KB Financial Group, you can compare the effects of market volatilities on JAPAN TOBACCO 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 JAPAN TOBACCO with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and KB Financial.
Diversification Opportunities for JAPAN TOBACCO and KB Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAPAN and KBIA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO 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 JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO i.e., JAPAN TOBACCO and KB Financial go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and KB Financial
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 0.46 times more return on investment than KB Financial. However, JAPAN TOBACCO UNSPADR12 is 2.15 times less risky than KB Financial. It trades about -0.16 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.13 per unit of risk. If you would invest 1,280 in JAPAN TOBACCO UNSPADR12 on December 4, 2024 and sell it today you would lose (130.00) from holding JAPAN TOBACCO UNSPADR12 or give up 10.16% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. KB Financial Group
Performance |
Timeline |
JAPAN TOBACCO UNSPADR12 |
KB Financial Group |
JAPAN TOBACCO and KB Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with JAPAN TOBACCO and KB Financial
The main advantage of trading using opposite JAPAN TOBACCO and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN TOBACCO 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.JAPAN TOBACCO vs. Canon Marketing Japan | JAPAN TOBACCO vs. CSSC Offshore Marine | JAPAN TOBACCO vs. TOMBADOR IRON LTD | JAPAN TOBACCO vs. Insteel Industries |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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