Correlation Between KB Financial and AmeriServ Financial

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

Diversification Opportunities for KB Financial and AmeriServ Financial

0.5

Correlation Coefficient

KB Financial  AmeriServ Financial

Very weak diversification

The 3 months correlation between KB Financial and AmeriServ is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and AmeriServ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeriServ Financial 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 AmeriServ Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeriServ Financial has no effect on the direction of KB Financial i.e., KB Financial and AmeriServ Financial go up and down completely randomly.

Pair Corralation between KB Financial and AmeriServ Financial

Allowing for the 90-day total investment horizon KB Financial is expected to generate 7.79 times less return on investment than AmeriServ Financial. In addition to that, KB Financial is 1.11 times more volatile than AmeriServ Financial. It trades about 0.01 of its total potential returns per unit of risk. AmeriServ Financial is currently generating about 0.08 per unit of volatility. If you would invest  261.00  in AmeriServ Financial on September 12, 2024 and sell it today you would earn a total of  27.00  from holding AmeriServ Financial or generate 10.34% return on investment over 90 days.

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

KB Financial Group  vs.  AmeriServ Financial

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 current stock price disturbance, may contribute to short-term losses for the investors.

AmeriServ Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AmeriServ Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, AmeriServ Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KB Financial and AmeriServ Financial

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

The idea behind KB Financial Group and AmeriServ Financial 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.