Correlation Between Ming Le and KB Financial

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

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

Diversification Opportunities for Ming Le and KB Financial

0.6

Correlation Coefficient

Ming Le  KB Financial

Poor diversification

The 3 months correlation between Ming and KBIA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports 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 Ming Le 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 Ming Le Sports 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 Ming Le i.e., Ming Le and KB Financial go up and down completely randomly.

Pair Corralation between Ming Le and KB Financial

Assuming the 90 days trading horizon Ming Le Sports is expected to under-perform the KB Financial. In addition to that, Ming Le is 1.92 times more volatile than KB Financial Group. It trades about -0.04 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.02 per unit of volatility. If you would invest  5,350  in KB Financial Group on December 29, 2024 and sell it today you would lose (200.00) from holding KB Financial Group or give up 3.74% of portfolio value over 90 days.

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

Ming Le Sports  vs.  KB Financial Group

Ming Le Sports

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ming Le Sports has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with Ming Le and KB Financial

The main advantage of trading using opposite Ming Le and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le 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 Ming Le Sports 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.