Correlation Between KB Financial and AIR LIQUIDE

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

Diversification Opportunities for KB Financial and AIR LIQUIDE

-0.66

Correlation Coefficient

KB Financial  AIR LIQUIDE

Excellent diversification

The 3 months correlation between KBIA and AIR is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and AIR LIQUIDE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR LIQUIDE ADR 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 AIR LIQUIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR LIQUIDE ADR has no effect on the direction of KB Financial i.e., KB Financial and AIR LIQUIDE go up and down completely randomly.

Pair Corralation between KB Financial and AIR LIQUIDE

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the AIR LIQUIDE. In addition to that, KB Financial is 1.2 times more volatile than AIR LIQUIDE ADR. It trades about -0.02 of its total potential returns per unit of risk. AIR LIQUIDE ADR is currently generating about 0.15 per unit of volatility. If you would invest  3,060  in AIR LIQUIDE ADR on December 28, 2024 and sell it today you would earn a total of  460.00  from holding AIR LIQUIDE ADR or generate 15.03% return on investment over 90 days.

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

KB Financial Group  vs.  AIR LIQUIDE ADR

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 nearly stable forward indicators, KB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AIR LIQUIDE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIR LIQUIDE ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, AIR LIQUIDE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and AIR LIQUIDE

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

The idea behind KB Financial Group and AIR LIQUIDE ADR 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.