Correlation Between KB Financial and BCB Bancorp

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

Diversification Opportunities for KB Financial and BCB Bancorp

-0.09

Correlation Coefficient

KB Financial  BCB Bancorp

Good diversification

The 3 months correlation between KB Financial and BCB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of KB Financial i.e., KB Financial and BCB Bancorp go up and down completely randomly.

Pair Corralation between KB Financial and BCB Bancorp

Allowing for the 90-day total investment horizon KB Financial is expected to generate 1.09 times less return on investment than BCB Bancorp. In addition to that, KB Financial is 1.03 times more volatile than BCB Bancorp. It trades about 0.05 of its total potential returns per unit of risk. BCB Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  956.00  in BCB Bancorp on February 14, 2024 and sell it today you would earn a total of  53.00  from holding BCB Bancorp or generate 5.54% 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.  BCB Bancorp

KB Financial Group

Risk-Adjusted Performance

9 of 100

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 fragile fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

BCB Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, BCB Bancorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with KB Financial and BCB Bancorp

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

The idea behind KB Financial Group and BCB Bancorp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.