Correlation Between Zoom Video and KB Financial

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

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

Diversification Opportunities for Zoom Video and KB Financial

0.2

Correlation Coefficient

Zoom Video  KB Financial

Modest diversification

The 3 months correlation between Zoom and K1BF34 is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications 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 Zoom Video 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 Zoom Video Communications 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 Zoom Video i.e., Zoom Video and KB Financial go up and down completely randomly.

Pair Corralation between Zoom Video and KB Financial

Assuming the 90 days trading horizon Zoom Video Communications is expected to generate 1.19 times more return on investment than KB Financial. However, Zoom Video is 1.19 times more volatile than KB Financial Group. It trades about 0.14 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  1,808  in Zoom Video Communications on October 7, 2024 and sell it today you would earn a total of  250.00  from holding Zoom Video Communications or generate 13.83% return on investment over 90 days.

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

Zoom Video Communications  vs.  KB Financial Group

Zoom Video Communications

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zoom Video sustained solid returns over the last few months and may actually be approaching a breakup point.

KB Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, KB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zoom Video and KB Financial

The main advantage of trading using opposite Zoom Video and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video 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 Zoom Video Communications 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.