Correlation Between KB Financial and Fulton Financial

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

Diversification Opportunities for KB Financial and Fulton Financial

0.75

Correlation Coefficient

KB Financial  Fulton Financial

Poor diversification

The 3 months correlation between KB Financial and Fulton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Fulton Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulton Financial 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 Fulton Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulton Financial has no effect on the direction of KB Financial i.e., KB Financial and Fulton Financial go up and down completely randomly.

Pair Corralation between KB Financial and Fulton Financial

Allowing for the 90-day total investment horizon KB Financial is expected to generate 1.41 times less return on investment than Fulton Financial. In addition to that, KB Financial is 2.36 times more volatile than Fulton Financial. It trades about 0.06 of its total potential returns per unit of risk. Fulton Financial is currently generating about 0.21 per unit of volatility. If you would invest  1,835  in Fulton Financial on September 2, 2024 and sell it today you would earn a total of  265.00  from holding Fulton Financial or generate 14.44% return on investment over 90 days.

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

KB Financial Group  vs.  Fulton Financial

KB Financial Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fulton Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fulton Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fulton Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Fulton Financial

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

The idea behind KB Financial Group and Fulton Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..