Correlation Between RFTech and KB Financial

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

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

Diversification Opportunities for RFTech and KB Financial

-0.35

Correlation Coefficient

RFTech  KB Financial

Very good diversification

The 3 months correlation between RFTech and 105560 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co 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 RFTech 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 RFTech Co 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 RFTech i.e., RFTech and KB Financial go up and down completely randomly.

Pair Corralation between RFTech and KB Financial

Assuming the 90 days trading horizon RFTech Co is expected to generate 0.89 times more return on investment than KB Financial. However, RFTech Co is 1.13 times less risky than KB Financial. It trades about 0.14 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.04 per unit of risk. If you would invest  321,000  in RFTech Co on September 29, 2024 and sell it today you would earn a total of  68,000  from holding RFTech Co or generate 21.18% return on investment over 90 days.

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

RFTech Co  vs.  KB Financial Group

RFTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RFTech Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RFTech sustained solid returns over the last few months and may actually be approaching a breakup point.

KB Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RFTech and KB Financial

The main advantage of trading using opposite RFTech and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech 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 RFTech Co 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.