Correlation Between KB Financial and WesBanco

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

Diversification Opportunities for KB Financial and WesBanco

0.18

Correlation Coefficient

KB Financial  WesBanco

Average diversification

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

Pair Corralation between KB Financial and WesBanco

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 8.89 times more return on investment than WesBanco. However, KB Financial is 8.89 times more volatile than WesBanco. It trades about 0.03 of its potential returns per unit of risk. WesBanco is currently generating about 0.19 per unit of risk. If you would invest  5,895  in KB Financial Group on September 12, 2024 and sell it today you would earn a total of  128.00  from holding KB Financial Group or generate 2.17% 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.  WesBanco

KB Financial Group

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

WesBanco

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with KB Financial and WesBanco

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

The idea behind KB Financial Group and WesBanco 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.