Correlation Between KB Financial and Bank Ozk

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

Diversification Opportunities for KB Financial and Bank Ozk

0.7

Correlation Coefficient

KB Financial  Bank Ozk

Poor diversification

The 3 months correlation between KB Financial and Bank is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Bank Ozk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ozk 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 Bank Ozk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ozk has no effect on the direction of KB Financial i.e., KB Financial and Bank Ozk go up and down completely randomly.

Pair Corralation between KB Financial and Bank Ozk

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.84 times more return on investment than Bank Ozk. However, KB Financial Group is 1.19 times less risky than Bank Ozk. It trades about 0.07 of its potential returns per unit of risk. Bank Ozk is currently generating about 0.03 per unit of risk. If you would invest  3,668  in KB Financial Group on September 2, 2024 and sell it today you would earn a total of  3,225  from holding KB Financial Group or generate 87.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KB Financial Group  vs.  Bank Ozk

KB Financial Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank Ozk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ozk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bank Ozk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Bank Ozk

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

The idea behind KB Financial Group and Bank Ozk 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.