Correlation Between Nu Holdings and KB Financial

Can any of the company-specific risk be diversified away by investing in both Nu Holdings and KB 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 Nu Holdings and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nu Holdings and KB Financial Group, you can compare the effects of market volatilities on Nu Holdings and KB 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 Nu Holdings with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Holdings and KB Financial.

Diversification Opportunities for Nu Holdings and KB Financial

0.23

Correlation Coefficient

Nu Holdings  KB Financial

Modest diversification

The 3 months correlation between Nu Holdings and KB Financial is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nu Holdings and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Nu Holdings 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 Nu Holdings are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Nu Holdings i.e., Nu Holdings and KB Financial go up and down completely randomly.

Pair Corralation between Nu Holdings and KB Financial

Allowing for the 90-day total investment horizon Nu Holdings is expected to under-perform the KB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Nu Holdings is 1.0 times less risky than KB Financial. The stock trades about -0.1 of its potential returns per unit of risk. The KB Financial Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,166  in KB Financial Group on September 14, 2024 and sell it today you would lose (83.00) from holding KB Financial Group or give up 1.35% of portfolio value over 90 days.

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

Nu Holdings  vs.  KB Financial Group

Nu Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nu Holdings and KB Financial

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

The idea behind Nu Holdings and KB Financial Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.