Correlation Between KB Financial and Aeroports

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

Diversification Opportunities for KB Financial and Aeroports

0.65

Correlation Coefficient

KB Financial  Aeroports

Poor diversification

The 3 months correlation between KBIA and Aeroports is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of KB Financial i.e., KB Financial and Aeroports go up and down completely randomly.

Pair Corralation between KB Financial and Aeroports

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.13 times more return on investment than Aeroports. However, KB Financial is 1.13 times more volatile than Aeroports de Paris. It trades about -0.05 of its potential returns per unit of risk. Aeroports de Paris is currently generating about -0.14 per unit of risk. If you would invest  5,350  in KB Financial Group on December 29, 2024 and sell it today you would lose (350.00) from holding KB Financial Group or give up 6.54% of portfolio value over 90 days.

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

KB Financial Group  vs.  Aeroports de Paris

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.

Aeroports de Paris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeroports de Paris 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 basic 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.

Pair Trading with KB Financial and Aeroports

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

The idea behind KB Financial Group and Aeroports de Paris 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.