Correlation Between KB Financial and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both KB Financial and ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp, you can compare the effects of market volatilities on KB Financial and ESSA Bancorp 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and ESSA Bancorp.
Diversification Opportunities for KB Financial and ESSA Bancorp
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KB Financial and ESSA is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Bancorp 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of KB Financial i.e., KB Financial and ESSA Bancorp go up and down completely randomly.
Pair Corralation between KB Financial and ESSA Bancorp
Allowing for the 90-day total investment horizon KB Financial is expected to generate 1.51 times less return on investment than ESSA Bancorp. But when comparing it to its historical volatility, KB Financial Group is 1.11 times less risky than ESSA Bancorp. It trades about 0.05 of its potential returns per unit of risk. ESSA Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,426 in ESSA Bancorp on January 17, 2024 and sell it today you would earn a total of 295.00 from holding ESSA Bancorp or generate 20.69% 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. ESSA Bancorp
Performance |
| Timeline |
| KB Financial Group |
| ESSA Bancorp |
KB Financial and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and ESSA Bancorp
The main advantage of trading using opposite KB Financial and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, ESSA Bancorp 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads | KB Financial vs. SK Telecom Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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