Correlation Between KB Financial and William Penn

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

Diversification Opportunities for KB Financial and William Penn

0.61

Correlation Coefficient

KB Financial  William Penn

Poor diversification

The 3 months correlation between KB Financial and William is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp 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 William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of KB Financial i.e., KB Financial and William Penn go up and down completely randomly.

Pair Corralation between KB Financial and William Penn

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.41 times more return on investment than William Penn. However, KB Financial is 1.41 times more volatile than William Penn Bancorp. It trades about 0.05 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.03 per unit of risk. If you would invest  3,434  in KB Financial Group on December 1, 2024 and sell it today you would earn a total of  1,998  from holding KB Financial Group or generate 58.18% 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.  William Penn Bancorp

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 fragile performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

William Penn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with KB Financial and William Penn

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

The idea behind KB Financial Group and William Penn Bancorp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.