Correlation Between KB Financial and Premier Foods
Can any of the company-specific risk be diversified away by investing in both KB Financial and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on KB Financial and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Premier Foods.
Diversification Opportunities for KB Financial and Premier Foods
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBIA and Premier is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of KB Financial i.e., KB Financial and Premier Foods go up and down completely randomly.
Pair Corralation between KB Financial and Premier Foods
Assuming the 90 days trading horizon KB Financial Group is expected to generate 1.74 times more return on investment than Premier Foods. However, KB Financial is 1.74 times more volatile than Premier Foods PLC. It trades about 0.11 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.12 per unit of risk. If you would invest 3,487 in KB Financial Group on September 4, 2024 and sell it today you would earn a total of 3,063 from holding KB Financial Group or generate 87.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. Premier Foods PLC
Performance |
| Timeline |
| KB Financial Group |
| Premier Foods PLC |
KB Financial and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and Premier Foods
The main advantage of trading using opposite KB Financial and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| KB Financial vs. KENNAMETAL INC | KB Financial vs. WT OFFSHORE | KB Financial vs. EHEALTH | KB Financial vs. GALENA MINING LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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