Correlation Between KB Financial and Apartment Investment

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

Diversification Opportunities for KB Financial and Apartment Investment

-0.21

Correlation Coefficient

KB Financial  Apartment Investment

Very good diversification

The 3 months correlation between K1BF34 and Apartment is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of KB Financial i.e., KB Financial and Apartment Investment go up and down completely randomly.

Pair Corralation between KB Financial and Apartment Investment

Assuming the 90 days trading horizon KB Financial is expected to generate 44.65 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, KB Financial Group is 4.71 times less risky than Apartment Investment. It trades about 0.01 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,045  in Apartment Investment and on October 22, 2024 and sell it today you would earn a total of  449.00  from holding Apartment Investment and or generate 8.9% return on investment over 90 days.

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

KB Financial Group  vs.  Apartment Investment and

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 somewhat strong fundamental drivers, KB Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Apartment Investment and

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Apartment Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Apartment Investment

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

The idea behind KB Financial Group and Apartment Investment and 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 Stocks Directory module to find actively traded stocks across global markets.