Correlation Between PT Bank and KB Financial

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

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

Diversification Opportunities for PT Bank and KB Financial

-0.1

Correlation Coefficient

PT Bank  KB Financial

Good diversification

The 3 months correlation between BZG2 and KBIA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central 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 PT Bank 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 PT Bank Central 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 PT Bank i.e., PT Bank and KB Financial go up and down completely randomly.

Pair Corralation between PT Bank and KB Financial

Assuming the 90 days trading horizon PT Bank is expected to generate 2.52 times less return on investment than KB Financial. In addition to that, PT Bank is 1.4 times more volatile than KB Financial Group. It trades about 0.03 of its total potential returns per unit of risk. KB Financial Group is currently generating about 0.09 per unit of volatility. If you would invest  5,737  in KB Financial Group on September 3, 2024 and sell it today you would earn a total of  863.00  from holding KB Financial Group or generate 15.04% return on investment over 90 days.

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

PT Bank Central  vs.  KB Financial Group

PT Bank Central

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KB Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, KB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and KB Financial

The main advantage of trading using opposite PT Bank and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Central 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.