Correlation Between KB Financial and Transurban

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

Diversification Opportunities for KB Financial and Transurban

-0.3

Correlation Coefficient

KB Financial  Transurban

Very good diversification

The 3 months correlation between KBIA and Transurban is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of KB Financial i.e., KB Financial and Transurban go up and down completely randomly.

Pair Corralation between KB Financial and Transurban

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Transurban. In addition to that, KB Financial is 2.16 times more volatile than Transurban Group. It trades about -0.17 of its total potential returns per unit of risk. Transurban Group is currently generating about 0.05 per unit of volatility. If you would invest  753.00  in Transurban Group on December 3, 2024 and sell it today you would earn a total of  23.00  from holding Transurban Group or generate 3.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

KB Financial Group  vs.  Transurban Group

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.

Transurban Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transurban Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Transurban is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KB Financial and Transurban

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

The idea behind KB Financial Group and Transurban Group 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.