Correlation Between KB Financial and Nissan

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

Diversification Opportunities for KB Financial and Nissan

-0.46

Correlation Coefficient

KB Financial  Nissan

Very good diversification

The 3 months correlation between KB Financial and Nissan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Nissan Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Motor 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 Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Motor has no effect on the direction of KB Financial i.e., KB Financial and Nissan go up and down completely randomly.

Pair Corralation between KB Financial and Nissan

Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Nissan. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 5.82 times less risky than Nissan. The stock trades about -0.01 of its potential returns per unit of risk. The Nissan Motor Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Nissan Motor Co on October 10, 2024 and sell it today you would earn a total of  49.00  from holding Nissan Motor Co or generate 19.6% 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.  Nissan Motor Co

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.

Nissan Motor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nissan Motor Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nissan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Nissan

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

The idea behind KB Financial Group and Nissan Motor Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.