Correlation Between KB Financial and CMUV Bancorp

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

Diversification Opportunities for KB Financial and CMUV Bancorp

-0.04

Correlation Coefficient

KB Financial  CMUV Bancorp

Good diversification

The 3 months correlation between KB Financial and CMUV is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and CMUV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMUV Bancorp 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 CMUV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMUV Bancorp has no effect on the direction of KB Financial i.e., KB Financial and CMUV Bancorp go up and down completely randomly.

Pair Corralation between KB Financial and CMUV Bancorp

Allowing for the 90-day total investment horizon KB Financial is expected to generate 1.47 times less return on investment than CMUV Bancorp. But when comparing it to its historical volatility, KB Financial Group is 1.1 times less risky than CMUV Bancorp. It trades about 0.24 of its potential returns per unit of risk. CMUV Bancorp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,050  in CMUV Bancorp on October 27, 2024 and sell it today you would earn a total of  200.00  from holding CMUV Bancorp or generate 9.76% 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.  CMUV Bancorp

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 latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CMUV Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMUV Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, CMUV Bancorp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and CMUV Bancorp

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

The idea behind KB Financial Group and CMUV Bancorp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.