Correlation Between KB Financial and LQR House

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

Diversification Opportunities for KB Financial and LQR House

-0.78

Correlation Coefficient

KB Financial  LQR House

Pay attention - limited upside

The 3 months correlation between KB Financial and LQR is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and LQR House Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LQR House Common 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 LQR House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LQR House Common has no effect on the direction of KB Financial i.e., KB Financial and LQR House go up and down completely randomly.

Pair Corralation between KB Financial and LQR House

Allowing for the 90-day total investment horizon KB Financial is expected to generate 4.0 times less return on investment than LQR House. But when comparing it to its historical volatility, KB Financial Group is 1.59 times less risky than LQR House. It trades about 0.24 of its potential returns per unit of risk. LQR House Common is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  127.00  in LQR House Common on October 26, 2024 and sell it today you would earn a total of  7.00  from holding LQR House Common or generate 5.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.05%
Values	Daily Returns

KB Financial Group  vs.  LQR House Common

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.

LQR House Common

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LQR House Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and LQR House

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

The idea behind KB Financial Group and LQR House Common 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.