Correlation Between KB Financial and Banco De

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

Diversification Opportunities for KB Financial and Banco De

-0.47

Correlation Coefficient

KB Financial  Banco De

Very good diversification

The 3 months correlation between KB Financial and Banco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Banco De Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco De Chile 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 Banco De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco De Chile has no effect on the direction of KB Financial i.e., KB Financial and Banco De go up and down completely randomly.

Pair Corralation between KB Financial and Banco De

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 2.01 times more return on investment than Banco De. However, KB Financial is 2.01 times more volatile than Banco De Chile. It trades about 0.07 of its potential returns per unit of risk. Banco De Chile is currently generating about -0.1 per unit of risk. If you would invest  6,304  in KB Financial Group on September 4, 2024 and sell it today you would earn a total of  572.00  from holding KB Financial Group or generate 9.07% return on investment over 90 days.

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

KB Financial Group  vs.  Banco De Chile

KB Financial Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Banco De Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco De Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with KB Financial and Banco De

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

The idea behind KB Financial Group and Banco De Chile 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.