Correlation Between KB Financial and Humax

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

Diversification Opportunities for KB Financial and Humax

-0.24

Correlation Coefficient

KB Financial  Humax

Very good diversification

The 3 months correlation between 105560 and Humax is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax 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 Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of KB Financial i.e., KB Financial and Humax go up and down completely randomly.

Pair Corralation between KB Financial and Humax

Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.05 times more return on investment than Humax. However, KB Financial is 1.05 times more volatile than Humax Co. It trades about -0.05 of its potential returns per unit of risk. Humax Co is currently generating about -0.5 per unit of risk. If you would invest  9,100,000  in KB Financial Group on September 14, 2024 and sell it today you would lose (400,000) from holding KB Financial Group or give up 4.4% of portfolio value over 90 days.

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

KB Financial Group  vs.  Humax Co

KB Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KB Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Humax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Humax Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KB Financial and Humax

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

The idea behind KB Financial Group and Humax Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.