Correlation Between KB Financial and Canadian Apartment

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

Diversification Opportunities for KB Financial and Canadian Apartment

0.88

Correlation Coefficient

KB Financial  Canadian Apartment

Very poor diversification

The 3 months correlation between KB Financial and Canadian is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Canadian Apartment Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Apartment 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 Canadian Apartment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Apartment has no effect on the direction of KB Financial i.e., KB Financial and Canadian Apartment go up and down completely randomly.

Pair Corralation between KB Financial and Canadian Apartment

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.83 times more return on investment than Canadian Apartment. However, KB Financial is 1.83 times more volatile than Canadian Apartment Properties. It trades about 0.24 of its potential returns per unit of risk. Canadian Apartment Properties is currently generating about 0.13 per unit of risk. If you would invest  6,034  in KB Financial Group on April 28, 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	Strong
Accuracy	100.0%
Values	Daily Returns

KB Financial Group  vs.  Canadian Apartment Properties

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.

Canadian Apartment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Apartment Properties are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Canadian Apartment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with KB Financial and Canadian Apartment

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

The idea behind KB Financial Group and Canadian Apartment Properties 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.