Correlation Between KB Financial and Pharming Group
Can any of the company-specific risk be diversified away by investing in both KB Financial and Pharming Group 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 Pharming Group 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 Pharming Group NV, you can compare the effects of market volatilities on KB Financial and Pharming Group 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 Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Pharming Group.
Diversification Opportunities for KB Financial and Pharming Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KB Financial and Pharming is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV 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 Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of KB Financial i.e., KB Financial and Pharming Group go up and down completely randomly.
Pair Corralation between KB Financial and Pharming Group
Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.31 times more return on investment than Pharming Group. However, KB Financial is 1.31 times more volatile than Pharming Group NV. It trades about 0.19 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.04 per unit of risk. If you would invest 5,958 in KB Financial Group on October 23, 2024 and sell it today you would earn a total of 306.00 from holding KB Financial Group or generate 5.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Pharming Group NV
Performance |
| Timeline |
| KB Financial Group |
| Pharming Group NV |
KB Financial and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Pharming Group
The main advantage of trading using opposite KB Financial and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Pharming Group 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 Pharming Group will offset losses from the drop in Pharming Group'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 |
| Pharming Group vs. Garibaldi Resources Corp | Pharming Group vs. IGG Inc | Pharming Group vs. Sino Biopharmaceutical Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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