Correlation Between KB Financial and Silvergate Capital

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

Diversification Opportunities for KB Financial and Silvergate Capital

-0.55

Correlation Coefficient

KB Financial  Silvergate Capital

Excellent diversification

The 3 months correlation between KB Financial and Silvergate is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Silvergate Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvergate Capital 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 Silvergate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvergate Capital has no effect on the direction of KB Financial i.e., KB Financial and Silvergate Capital go up and down completely randomly.

Pair Corralation between KB Financial and Silvergate Capital

If you would invest  5,895  in KB Financial Group on September 12, 2024 and sell it today you would lose (47.00) from holding KB Financial Group or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

KB Financial Group  vs.  Silvergate Capital

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 somewhat strong fundamental drivers, KB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Silvergate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silvergate Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Silvergate Capital is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KB Financial and Silvergate Capital

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

The idea behind KB Financial Group and Silvergate Capital 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.