Correlation Between KB Financial and Scientific Industries

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

Diversification Opportunities for KB Financial and Scientific Industries

0.23

Correlation Coefficient

KB Financial  Scientific Industries

Modest diversification

The 3 months correlation between KB Financial and Scientific is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Scientific Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Industries 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 Scientific Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Industries has no effect on the direction of KB Financial i.e., KB Financial and Scientific Industries go up and down completely randomly.

Pair Corralation between KB Financial and Scientific Industries

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.29 times more return on investment than Scientific Industries. However, KB Financial Group is 3.4 times less risky than Scientific Industries. It trades about -0.17 of its potential returns per unit of risk. Scientific Industries is currently generating about -0.09 per unit of risk. If you would invest  6,028  in KB Financial Group on October 6, 2024 and sell it today you would lose (274.00) from holding KB Financial Group or give up 4.55% of portfolio value over 90 days.

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

KB Financial Group  vs.  Scientific Industries

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.

Scientific Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Scientific Industries is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KB Financial and Scientific Industries

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

The idea behind KB Financial Group and Scientific Industries 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.