Correlation Between KB Financial and PTT Exploration

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

Diversification Opportunities for KB Financial and PTT Exploration

0.67

Correlation Coefficient

KB Financial  PTT Exploration

Poor diversification

The 3 months correlation between KBIA and PTT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and PTT Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Exploration 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 PTT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Exploration has no effect on the direction of KB Financial i.e., KB Financial and PTT Exploration go up and down completely randomly.

Pair Corralation between KB Financial and PTT Exploration

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the PTT Exploration. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 2.09 times less risky than PTT Exploration. The stock trades about -0.02 of its potential returns per unit of risk. The PTT Exploration and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  299.00  in PTT Exploration and on December 28, 2024 and sell it today you would earn a total of  33.00  from holding PTT Exploration and or generate 11.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

KB Financial Group  vs.  PTT Exploration and

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.

PTT Exploration

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PTT Exploration and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PTT Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and PTT Exploration

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

The idea behind KB Financial Group and PTT Exploration and 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.