Correlation Between KB Financial and Rhinebeck Bancorp

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

Diversification Opportunities for KB Financial and Rhinebeck Bancorp

0.87

Correlation Coefficient

KB Financial  Rhinebeck Bancorp

Very poor diversification

The 3 months correlation between KB Financial and Rhinebeck is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp 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 Rhinebeck Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rhinebeck Bancorp has no effect on the direction of KB Financial i.e., KB Financial and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between KB Financial and Rhinebeck Bancorp

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.29 times more return on investment than Rhinebeck Bancorp. However, KB Financial is 1.29 times more volatile than Rhinebeck Bancorp. It trades about 0.28 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.21 per unit of risk. If you would invest  6,034  in KB Financial Group on April 26, 2025 and sell it today you would earn a total of  3,002  from holding KB Financial Group or generate 49.75% 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.  Rhinebeck Bancorp

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 22 (%) 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.

Rhinebeck Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Rhinebeck Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Rhinebeck Bancorp

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

The idea behind KB Financial Group and Rhinebeck Bancorp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.