Correlation Between KB Financial and Credicorp

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

Diversification Opportunities for KB Financial and Credicorp

0.97

Correlation Coefficient

KB Financial  Credicorp

Almost no diversification

The 3 months correlation between KB Financial and Credicorp is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp 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 Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of KB Financial i.e., KB Financial and Credicorp go up and down completely randomly.

Pair Corralation between KB Financial and Credicorp

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 2.3 times more return on investment than Credicorp. However, KB Financial is 2.3 times more volatile than Credicorp. It trades about 0.24 of its potential returns per unit of risk. Credicorp is currently generating about 0.33 per unit of risk. If you would invest  6,034  in KB Financial Group on April 27, 2025 and sell it today you would earn a total of  2,557  from holding KB Financial Group or generate 42.38% return on investment over 90 days.

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

KB Financial Group  vs.  Credicorp

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 18 (%) 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.

Credicorp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Credicorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Credicorp

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

The idea behind KB Financial Group and Credicorp 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.