Correlation Between KB Financial and INDIKA ENERGY

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

Diversification Opportunities for KB Financial and INDIKA ENERGY

-0.07

Correlation Coefficient

KB Financial  INDIKA ENERGY

Good diversification

The 3 months correlation between KBIA and INDIKA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of KB Financial i.e., KB Financial and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between KB Financial and INDIKA ENERGY

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the INDIKA ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.46 times less risky than INDIKA ENERGY. The stock trades about -0.13 of its potential returns per unit of risk. The INDIKA ENERGY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9.20  in INDIKA ENERGY on November 29, 2024 and sell it today you would earn a total of  0.10  from holding INDIKA ENERGY or generate 1.09% return on investment over 90 days.

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

KB Financial Group  vs.  INDIKA ENERGY

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 uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

INDIKA ENERGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INDIKA ENERGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, INDIKA ENERGY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KB Financial and INDIKA ENERGY

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

The idea behind KB Financial Group and INDIKA 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..