Correlation Between KB Financial and Sorrento Therape
Can any of the company-specific risk be diversified away by investing in both KB Financial and Sorrento Therape 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 Sorrento Therape 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 Sorrento Therape, you can compare the effects of market volatilities on KB Financial and Sorrento Therape 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 Sorrento Therape. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Sorrento Therape.
Diversification Opportunities for KB Financial and Sorrento Therape
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KB Financial and Sorrento is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Sorrento Therape in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sorrento Therape 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 Sorrento Therape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sorrento Therape has no effect on the direction of KB Financial i.e., KB Financial and Sorrento Therape go up and down completely randomly.
Pair Corralation between KB Financial and Sorrento Therape
Allowing for the 90-day total investment horizon KB Financial is expected to generate 6.66 times less return on investment than Sorrento Therape. But when comparing it to its historical volatility, KB Financial Group is 14.25 times less risky than Sorrento Therape. It trades about 0.15 of its potential returns per unit of risk. Sorrento Therape is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Sorrento Therape on August 30, 2024 and sell it today you would lose (0.22) from holding Sorrento Therape or give up 55.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
KB Financial Group vs. Sorrento Therape
Performance |
| Timeline |
| KB Financial Group |
| Sorrento Therape |
KB Financial and Sorrento Therape Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Sorrento Therape
The main advantage of trading using opposite KB Financial and Sorrento Therape positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Sorrento Therape 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 Sorrento Therape will offset losses from the drop in Sorrento Therape's long position.| KB Financial vs. JPMorgan Chase Co | KB Financial vs. Citigroup | KB Financial vs. Wells Fargo | KB Financial vs. Toronto Dominion Bank |
| Sorrento Therape vs. Nok Airlines Public | Sorrento Therape vs. Delta Air Lines | Sorrento Therape vs. BCE Inc | Sorrento Therape vs. Nextplat Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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