Correlation Between KB Financial and American Sierra
Can any of the company-specific risk be diversified away by investing in both KB Financial and American Sierra 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 American Sierra 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 American Sierra Gold, you can compare the effects of market volatilities on KB Financial and American Sierra 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 American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and American Sierra.
Diversification Opportunities for KB Financial and American Sierra
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KB Financial and American is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold 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 American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of KB Financial i.e., KB Financial and American Sierra go up and down completely randomly.
Pair Corralation between KB Financial and American Sierra
Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the American Sierra. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 11.45 times less risky than American Sierra. The stock trades about -0.18 of its potential returns per unit of risk. The American Sierra Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.40 in American Sierra Gold on December 2, 2024 and sell it today you would earn a total of 0.10 from holding American Sierra Gold or generate 25.0% 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. American Sierra Gold
Performance |
Timeline |
KB Financial Group |
American Sierra Gold |
KB Financial and American Sierra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KB Financial and American Sierra
The main advantage of trading using opposite KB Financial and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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