Correlation Between KB Financial and Bonanza Goldfields

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

Diversification Opportunities for KB Financial and Bonanza Goldfields

0.0

Correlation Coefficient

KB Financial  Bonanza Goldfields

Pay attention - limited upside

The 3 months correlation between KB Financial and Bonanza is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Bonanza Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonanza Goldfields 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 Bonanza Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonanza Goldfields has no effect on the direction of KB Financial i.e., KB Financial and Bonanza Goldfields go up and down completely randomly.

Pair Corralation between KB Financial and Bonanza Goldfields

If you would invest (100.00) in Bonanza Goldfields on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Bonanza Goldfields or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

KB Financial Group  vs.  Bonanza Goldfields

KB Financial Group

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bonanza Goldfields

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bonanza Goldfields has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bonanza Goldfields is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KB Financial and Bonanza Goldfields

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

The idea behind KB Financial Group and Bonanza Goldfields 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.