Correlation Between KB Financial and Christian Dior

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

Diversification Opportunities for KB Financial and Christian Dior

0.12

Correlation Coefficient

KB Financial  Christian Dior

Average diversification

The 3 months correlation between KBIA and Christian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE 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 Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of KB Financial i.e., KB Financial and Christian Dior go up and down completely randomly.

Pair Corralation between KB Financial and Christian Dior

Assuming the 90 days trading horizon KB Financial Group is expected to generate 3.17 times more return on investment than Christian Dior. However, KB Financial is 3.17 times more volatile than Christian Dior SE. It trades about 0.11 of its potential returns per unit of risk. Christian Dior SE is currently generating about -0.11 per unit of risk. If you would invest  4,660  in KB Financial Group on January 31, 2024 and sell it today you would earn a total of  390.00  from holding KB Financial Group or generate 8.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

KB Financial Group  vs.  Christian Dior SE

KB Financial Group

Risk-Adjusted Performance

11 of 100

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

Christian Dior SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Christian Dior is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KB Financial and Christian Dior

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

The idea behind KB Financial Group and Christian Dior SE 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.