Correlation Between KB Financial and Lexinfintech Holdings

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

Diversification Opportunities for KB Financial and Lexinfintech Holdings

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between KB Financial and Lexinfintech is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of KB Financial i.e., KB Financial and Lexinfintech Holdings go up and down completely randomly.

Pair Corralation between KB Financial and Lexinfintech Holdings

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.46 times more return on investment than Lexinfintech Holdings. However, KB Financial Group is 2.19 times less risky than Lexinfintech Holdings. It trades about 0.02 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.01 per unit of risk. If you would invest  4,497  in KB Financial Group on December 30, 2023 and sell it today you would earn a total of  710.00  from holding KB Financial Group or generate 15.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

KB Financial Group  vs.  Lexinfintech Holdings

 Performance 
       Timeline  
KB Financial Group 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.
Lexinfintech Holdings 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lexinfintech Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Lexinfintech Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

KB Financial and Lexinfintech Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KB Financial and Lexinfintech Holdings

The main advantage of trading using opposite KB Financial and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.
The idea behind KB Financial Group and Lexinfintech Holdings 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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