Correlation Between KB Financial and Black Knight

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

Diversification Opportunities for KB Financial and Black Knight

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between KB Financial and Black is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight 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 Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of KB Financial i.e., KB Financial and Black Knight go up and down completely randomly.

Pair Corralation between KB Financial and Black Knight

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.24 times more return on investment than Black Knight. However, KB Financial is 1.24 times more volatile than Black Knight. It trades about 0.04 of its potential returns per unit of risk. Black Knight is currently generating about 0.03 per unit of risk. If you would invest  4,358  in KB Financial Group on February 17, 2024 and sell it today you would earn a total of  1,523  from holding KB Financial Group or generate 34.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy64.24%
ValuesDaily Returns

KB Financial Group  vs.  Black Knight

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
Black Knight 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

KB Financial and Black Knight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and Black Knight

The main advantage of trading using opposite KB Financial and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Black Knight 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 Black Knight will offset losses from the drop in Black Knight's long position.
The idea behind KB Financial Group and Black Knight 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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