Correlation Between KB Financial and Community Bank
Can any of the company-specific risk be diversified away by investing in both KB Financial and Community Bank 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 Community Bank 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 Community Bank System, you can compare the effects of market volatilities on KB Financial and Community Bank 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 Community Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Community Bank.
Diversification Opportunities for KB Financial and Community Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KB Financial and Community is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Community Bank System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank System 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 Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank System has no effect on the direction of KB Financial i.e., KB Financial and Community Bank go up and down completely randomly.
Pair Corralation between KB Financial and Community Bank
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.56 times more return on investment than Community Bank. However, KB Financial is 1.56 times more volatile than Community Bank System. It trades about 0.26 of its potential returns per unit of risk. Community Bank System is currently generating about 0.07 per unit of risk. If you would invest 5,860 in KB Financial Group on April 23, 2025 and sell it today you would earn a total of 2,459 from holding KB Financial Group or generate 41.96% 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. Community Bank System
Performance |
Timeline |
KB Financial Group |
Community Bank System |
KB Financial and Community Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KB Financial and Community Bank
The main advantage of trading using opposite KB Financial and Community Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Community Bank 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 Community Bank will offset losses from the drop in Community Bank's long position.KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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