Correlation Between KB Financial and Exmar NV

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

Diversification Opportunities for KB Financial and Exmar NV

-0.31

Correlation Coefficient

KB Financial  Exmar NV

Very good diversification

The 3 months correlation between KB Financial and Exmar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Exmar NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exmar NV 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 Exmar NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exmar NV has no effect on the direction of KB Financial i.e., KB Financial and Exmar NV go up and down completely randomly.

Pair Corralation between KB Financial and Exmar NV

Allowing for the 90-day total investment horizon KB Financial is expected to generate 8.11 times less return on investment than Exmar NV. But when comparing it to its historical volatility, KB Financial Group is 8.89 times less risky than Exmar NV. It trades about 0.26 of its potential returns per unit of risk. Exmar NV is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  765.00  in Exmar NV on October 26, 2024 and sell it today you would earn a total of  420.00  from holding Exmar NV or generate 54.9% 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.  Exmar NV

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.

Exmar NV

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Exmar NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Exmar NV

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

The idea behind KB Financial Group and Exmar NV 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.