Correlation Between KB Financial and SoftBank Corp

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

Diversification Opportunities for KB Financial and SoftBank Corp

-0.62

Correlation Coefficient

KB Financial  SoftBank Corp

Excellent diversification

The 3 months correlation between KB Financial and SoftBank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and SoftBank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Corp 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 SoftBank Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Corp has no effect on the direction of KB Financial i.e., KB Financial and SoftBank Corp go up and down completely randomly.

Pair Corralation between KB Financial and SoftBank Corp

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.96 times more return on investment than SoftBank Corp. However, KB Financial is 1.96 times more volatile than SoftBank Corp. It trades about 0.05 of its potential returns per unit of risk. SoftBank Corp is currently generating about 0.04 per unit of risk. If you would invest  3,874  in KB Financial Group on September 26, 2024 and sell it today you would earn a total of  2,081  from holding KB Financial Group or generate 53.72% return on investment over 90 days.

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

KB Financial Group  vs.  SoftBank Corp

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.

SoftBank Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftBank Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KB Financial and SoftBank Corp

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

The idea behind KB Financial Group and SoftBank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.