Correlation Between KB Financial and CHAODA MODERN

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

Diversification Opportunities for KB Financial and CHAODA MODERN

-0.47

Correlation Coefficient

KB Financial  CHAODA MODERN

Very good diversification

The 3 months correlation between KBIA and CHAODA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and CHAODA MODERN AGRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAODA MODERN AGRI 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 CHAODA MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAODA MODERN AGRI has no effect on the direction of KB Financial i.e., KB Financial and CHAODA MODERN go up and down completely randomly.

Pair Corralation between KB Financial and CHAODA MODERN

Assuming the 90 days trading horizon KB Financial Group is expected to generate 0.27 times more return on investment than CHAODA MODERN. However, KB Financial Group is 3.75 times less risky than CHAODA MODERN. It trades about 0.03 of its potential returns per unit of risk. CHAODA MODERN AGRI is currently generating about -0.02 per unit of risk. If you would invest  5,185  in KB Financial Group on September 19, 2024 and sell it today you would earn a total of  315.00  from holding KB Financial Group or generate 6.08% return on investment over 90 days.

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

KB Financial Group  vs.  CHAODA MODERN AGRI

KB Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, KB Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CHAODA MODERN AGRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAODA MODERN AGRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with KB Financial and CHAODA MODERN

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

The idea behind KB Financial Group and CHAODA MODERN AGRI 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.