Correlation Between KB Financial and Esquire Financial

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

Diversification Opportunities for KB Financial and Esquire Financial

0.85

Correlation Coefficient

KB Financial  Esquire Financial

Very poor diversification

The 3 months correlation between KB Financial and Esquire is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Esquire Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esquire Financial 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 Esquire Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esquire Financial has no effect on the direction of KB Financial i.e., KB Financial and Esquire Financial go up and down completely randomly.

Pair Corralation between KB Financial and Esquire Financial

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.44 times more return on investment than Esquire Financial. However, KB Financial is 1.44 times more volatile than Esquire Financial Holdings. It trades about 0.24 of its potential returns per unit of risk. Esquire Financial Holdings is currently generating about 0.16 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	Strong
Accuracy	100.0%
Values	Daily Returns

KB Financial Group  vs.  Esquire Financial Holdings

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.

Esquire Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esquire Financial Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Esquire Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Esquire Financial

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

The idea behind KB Financial Group and Esquire Financial Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.