Correlation Between KB Financial and Zhengzhou Coal

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

Diversification Opportunities for KB Financial and Zhengzhou Coal

-0.35

Correlation Coefficient

KB Financial  Zhengzhou Coal

Very good diversification

The 3 months correlation between KBIA and Zhengzhou is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Zhengzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Coal Mining 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 Zhengzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Coal Mining has no effect on the direction of KB Financial i.e., KB Financial and Zhengzhou Coal go up and down completely randomly.

Pair Corralation between KB Financial and Zhengzhou Coal

Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the Zhengzhou Coal. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.73 times less risky than Zhengzhou Coal. The stock trades about -0.08 of its potential returns per unit of risk. The Zhengzhou Coal Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Zhengzhou Coal Mining on December 22, 2024 and sell it today you would earn a total of  21.00  from holding Zhengzhou Coal Mining or generate 17.07% return on investment over 90 days.

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

KB Financial Group  vs.  Zhengzhou Coal Mining

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 latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Zhengzhou Coal Mining

Risk-Adjusted Performance

OK

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

Pair Trading with KB Financial and Zhengzhou Coal

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

The idea behind KB Financial Group and Zhengzhou Coal Mining 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.