Correlation Between KB Financial and Sekisui House

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

Diversification Opportunities for KB Financial and Sekisui House

-0.53

Correlation Coefficient

KB Financial  Sekisui House

Excellent diversification

The 3 months correlation between KB Financial and Sekisui is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of KB Financial i.e., KB Financial and Sekisui House go up and down completely randomly.

Pair Corralation between KB Financial and Sekisui House

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.87 times more return on investment than Sekisui House. However, KB Financial Group is 1.15 times less risky than Sekisui House. It trades about 0.0 of its potential returns per unit of risk. Sekisui House is currently generating about -0.08 per unit of risk. If you would invest  6,137  in KB Financial Group on September 13, 2024 and sell it today you would lose (114.00) from holding KB Financial Group or give up 1.86% of portfolio value over 90 days.

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

KB Financial Group  vs.  Sekisui House

KB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KB Financial and Sekisui House

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

The idea behind KB Financial Group and Sekisui House 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.