Correlation Between KB Financial and ABERFORTH SMCOS

Can any of the company-specific risk be diversified away by investing in both KB Financial and ABERFORTH SMCOS 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 ABERFORTH SMCOS 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 ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on KB Financial and ABERFORTH SMCOS 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 ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and ABERFORTH SMCOS.

Diversification Opportunities for KB Financial and ABERFORTH SMCOS

0.65

Correlation Coefficient

KB Financial  ABERFORTH SMCOS

Poor diversification

The 3 months correlation between KBIA and ABERFORTH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS 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 ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of KB Financial i.e., KB Financial and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between KB Financial and ABERFORTH SMCOS

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.45 times more return on investment than ABERFORTH SMCOS. However, KB Financial is 1.45 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about 0.22 of its potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about 0.16 per unit of risk. If you would invest  5,199  in KB Financial Group on April 23, 2025 and sell it today you would earn a total of  1,801  from holding KB Financial Group or generate 34.64% return on investment over 90 days.

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

KB Financial Group  vs.  ABERFORTH SMCOS TRLS 01

KB Financial Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 16 (%) 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.

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABERFORTH SMCOS TRLS 01 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ABERFORTH SMCOS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and ABERFORTH SMCOS

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

The idea behind KB Financial Group and ABERFORTH SMCOS TRLS 01 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.