Correlation Between KB Financial and CH HS

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

Diversification Opportunities for KB Financial and CH HS

-0.31

Correlation Coefficient

KB Financial  CH HS

Very good diversification

The 3 months correlation between KBIA and BGR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and CH HS TRANSMIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH HS TRANSMIS 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 CH HS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH HS TRANSMIS has no effect on the direction of KB Financial i.e., KB Financial and CH HS go up and down completely randomly.

Pair Corralation between KB Financial and CH HS

Assuming the 90 days trading horizon KB Financial is expected to generate 2.05 times less return on investment than CH HS. But when comparing it to its historical volatility, KB Financial Group is 1.01 times less risky than CH HS. It trades about 0.24 of its potential returns per unit of risk. CH HS TRANSMIS is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest  8.00  in CH HS TRANSMIS on February 16, 2024 and sell it today you would earn a total of  4.00  from holding CH HS TRANSMIS or generate 50.0% return on investment over 90 days.

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

KB Financial Group  vs.  CH HS TRANSMIS

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

CH HS TRANSMIS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CH HS TRANSMIS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with KB Financial and CH HS

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

The idea behind KB Financial Group and CH HS TRANSMIS 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.