Correlation Between KB Financial and White River

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

Diversification Opportunities for KB Financial and White River

0.76

Correlation Coefficient

KB Financial  White River

Poor diversification

The 3 months correlation between KB Financial and White is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and White River Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White River Energy 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 White River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White River Energy has no effect on the direction of KB Financial i.e., KB Financial and White River go up and down completely randomly.

Pair Corralation between KB Financial and White River

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.1 times more return on investment than White River. However, KB Financial Group is 10.39 times less risky than White River. It trades about -0.13 of its potential returns per unit of risk. White River Energy is currently generating about -0.22 per unit of risk. If you would invest  6,605  in KB Financial Group on October 9, 2024 and sell it today you would lose (738.00) from holding KB Financial Group or give up 11.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

KB Financial Group  vs.  White River Energy

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 latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

White River Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days White River Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with KB Financial and White River

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

The idea behind KB Financial Group and White River Energy 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.