Correlation Between KB Financial and SalMar ASA

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

Diversification Opportunities for KB Financial and SalMar ASA

0.28

Correlation Coefficient

KB Financial  SalMar ASA

Modest diversification

The 3 months correlation between KBIA and SalMar is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of KB Financial i.e., KB Financial and SalMar ASA go up and down completely randomly.

Pair Corralation between KB Financial and SalMar ASA

Assuming the 90 days trading horizon KB Financial is expected to generate 2.04 times less return on investment than SalMar ASA. But when comparing it to its historical volatility, KB Financial Group is 1.97 times less risky than SalMar ASA. It trades about 0.06 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,808  in SalMar ASA on December 1, 2024 and sell it today you would earn a total of  2,986  from holding SalMar ASA or generate 165.15% return on investment over 90 days.

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

KB Financial Group  vs.  SalMar ASA

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

SalMar ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalMar ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SalMar ASA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KB Financial and SalMar ASA

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

The idea behind KB Financial Group and SalMar ASA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.