Correlation Between KB Financial and Tinley Beverage

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

Diversification Opportunities for KB Financial and Tinley Beverage

0.18

Correlation Coefficient

KB Financial  Tinley Beverage

Average diversification

The 3 months correlation between KB Financial and Tinley is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and The Tinley Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinley Beverage 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 Tinley Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinley Beverage has no effect on the direction of KB Financial i.e., KB Financial and Tinley Beverage go up and down completely randomly.

Pair Corralation between KB Financial and Tinley Beverage

Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Tinley Beverage. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 10.8 times less risky than Tinley Beverage. The stock trades about -0.06 of its potential returns per unit of risk. The The Tinley Beverage is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.30  in The Tinley Beverage on December 30, 2024 and sell it today you would earn a total of  0.10  from holding The Tinley Beverage or generate 4.35% return on investment over 90 days.

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

KB Financial Group  vs.  The Tinley Beverage

KB Financial Group

Risk-Adjusted Performance

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.

Tinley Beverage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Tinley Beverage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, Tinley Beverage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Tinley Beverage

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

The idea behind KB Financial Group and The Tinley Beverage 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.