Correlation Between KB Financial and CREMECOMTRSBI

Can any of the company-specific risk be diversified away by investing in both KB Financial and CREMECOMTRSBI 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 CREMECOMTRSBI 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 CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on KB Financial and CREMECOMTRSBI 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 CREMECOMTRSBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and CREMECOMTRSBI.

Diversification Opportunities for KB Financial and CREMECOMTRSBI

-0.76

Correlation Coefficient

KB Financial  CREMECOMTRSBI

Pay attention - limited upside

The 3 months correlation between KBIA and CREMECOMTRSBI is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 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 CREMECOMTRSBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of KB Financial i.e., KB Financial and CREMECOMTRSBI go up and down completely randomly.

Pair Corralation between KB Financial and CREMECOMTRSBI

Assuming the 90 days trading horizon KB Financial is expected to generate 13.35 times less return on investment than CREMECOMTRSBI. But when comparing it to its historical volatility, KB Financial Group is 21.24 times less risky than CREMECOMTRSBI. It trades about 0.1 of its potential returns per unit of risk. CREMECOMTRSBI DL 001 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  163.00  in CREMECOMTRSBI DL 001 on September 4, 2024 and sell it today you would lose (157.60) from holding CREMECOMTRSBI DL 001 or give up 96.69% of portfolio value over 90 days.

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

KB Financial Group  vs.  CREMECOMTRSBI DL 001

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 unsteady forward indicators, KB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CREMECOMTRSBI DL 001 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CREMECOMTRSBI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and CREMECOMTRSBI

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

The idea behind KB Financial Group and CREMECOMTRSBI DL 001 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.