Correlation Between KB Financial and Univest Pennsylvania

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

Diversification Opportunities for KB Financial and Univest Pennsylvania

0.23

Correlation Coefficient

KB Financial  Univest Pennsylvania

Modest diversification

The 3 months correlation between KB Financial and Univest is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania 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 Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of KB Financial i.e., KB Financial and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between KB Financial and Univest Pennsylvania

Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Univest Pennsylvania. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.4 times less risky than Univest Pennsylvania. The stock trades about -0.04 of its potential returns per unit of risk. The Univest Pennsylvania is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,688  in Univest Pennsylvania on August 21, 2024 and sell it today you would earn a total of  389.00  from holding Univest Pennsylvania or generate 14.47% return on investment over 90 days.

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

KB Financial Group  vs.  Univest Pennsylvania

KB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KB Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Univest Pennsylvania

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Univest Pennsylvania are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Univest Pennsylvania reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Univest Pennsylvania

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

The idea behind KB Financial Group and Univest Pennsylvania 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.