Correlation Between Transport International and KB Financial

Can any of the company-specific risk be diversified away by investing in both Transport International and KB Financial 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 Transport International and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transport International Holdings and KB Financial Group, you can compare the effects of market volatilities on Transport International and KB Financial 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 Transport International with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and KB Financial.

Diversification Opportunities for Transport International and KB Financial

0.24

Correlation Coefficient

Transport International  KB Financial

Modest diversification

The 3 months correlation between Transport and KBIA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Transport International 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 Transport International Holdings are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Transport International i.e., Transport International and KB Financial go up and down completely randomly.

Pair Corralation between Transport International and KB Financial

Assuming the 90 days horizon Transport International Holdings is expected to generate 1.02 times more return on investment than KB Financial. However, Transport International is 1.02 times more volatile than KB Financial Group. It trades about 0.0 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.08 per unit of risk. If you would invest  94.00  in Transport International Holdings on December 22, 2024 and sell it today you would lose (1.00) from holding Transport International Holdings or give up 1.06% of portfolio value over 90 days.

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

Transport International Holdin  vs.  KB Financial Group

Transport International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transport International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transport International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Transport International and KB Financial

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

The idea behind Transport International Holdings and KB Financial 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.