Correlation Between KB Financial and Intouch Holdings

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

Diversification Opportunities for KB Financial and Intouch Holdings

0.67

Correlation Coefficient

KB Financial  Intouch Holdings

Poor diversification

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

Pair Corralation between KB Financial and Intouch Holdings

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.48 times more return on investment than Intouch Holdings. However, KB Financial is 1.48 times more volatile than Intouch Holdings Public. It trades about 0.08 of its potential returns per unit of risk. Intouch Holdings Public is currently generating about -0.22 per unit of risk. If you would invest  6,400  in KB Financial Group on August 30, 2024 and sell it today you would earn a total of  250.00  from holding KB Financial Group or generate 3.91% return on investment over 90 days.

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

KB Financial Group  vs.  Intouch Holdings Public

KB Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, KB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Intouch Holdings Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intouch Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Intouch Holdings

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

The idea behind KB Financial Group and Intouch Holdings Public 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.