Correlation Between KB Financial and TRU Precious

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

Diversification Opportunities for KB Financial and TRU Precious

0.39

Correlation Coefficient

KB Financial  TRU Precious

Weak diversification

The 3 months correlation between KB Financial and TRU is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and TRU Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRU Precious Metals 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 TRU Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRU Precious Metals has no effect on the direction of KB Financial i.e., KB Financial and TRU Precious go up and down completely randomly.

Pair Corralation between KB Financial and TRU Precious

Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the TRU Precious. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 8.78 times less risky than TRU Precious. The stock trades about -0.07 of its potential returns per unit of risk. The TRU Precious Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.02  in TRU Precious Metals on December 29, 2024 and sell it today you would earn a total of  0.00  from holding TRU Precious Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

KB Financial Group  vs.  TRU Precious Metals

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.

TRU Precious Metals

Risk-Adjusted Performance

Insignificant

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

Pair Trading with KB Financial and TRU Precious

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

The idea behind KB Financial Group and TRU Precious Metals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.