Correlation Between KB Financial and Daishin Sec

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

Diversification Opportunities for KB Financial and Daishin Sec

0.55

Correlation Coefficient

KB Financial  Daishin Sec

Very weak diversification

The 3 months correlation between 105560 and Daishin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Daishin Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daishin Sec 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 Daishin Sec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daishin Sec has no effect on the direction of KB Financial i.e., KB Financial and Daishin Sec go up and down completely randomly.

Pair Corralation between KB Financial and Daishin Sec

Assuming the 90 days trading horizon KB Financial Group is expected to generate 2.55 times more return on investment than Daishin Sec. However, KB Financial is 2.55 times more volatile than Daishin Sec. It trades about 0.08 of its potential returns per unit of risk. Daishin Sec is currently generating about 0.01 per unit of risk. If you would invest  8,614,821  in KB Financial Group on September 3, 2024 and sell it today you would earn a total of  1,005,179  from holding KB Financial Group or generate 11.67% return on investment over 90 days.

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

KB Financial Group  vs.  Daishin Sec

KB Financial Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Daishin Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Sec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daishin Sec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KB Financial and Daishin Sec

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

The idea behind KB Financial Group and Daishin Sec 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 Global Correlations module to find global opportunities by holding instruments from different markets.