Correlation Between KB Financial and AlphaTime Acquisition

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

Diversification Opportunities for KB Financial and AlphaTime Acquisition

0.81

Correlation Coefficient

KB Financial  AlphaTime Acquisition

Very poor diversification

The 3 months correlation between KB Financial and AlphaTime is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition 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 AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of KB Financial i.e., KB Financial and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between KB Financial and AlphaTime Acquisition

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 3.81 times more return on investment than AlphaTime Acquisition. However, KB Financial is 3.81 times more volatile than AlphaTime Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.05 per unit of risk. If you would invest  6,304  in KB Financial Group on September 4, 2024 and sell it today you would earn a total of  572.00  from holding KB Financial Group or generate 9.07% return on investment over 90 days.

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

KB Financial Group  vs.  AlphaTime Acquisition Corp

KB Financial Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AlphaTime Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AlphaTime Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, AlphaTime Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KB Financial and AlphaTime Acquisition

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

The idea behind KB Financial Group and AlphaTime Acquisition Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.