Correlation Between KB Financial and PERRIGO
Can any of the company-specific risk be diversified away by investing in both KB Financial and PERRIGO 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 PERRIGO 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 PERRIGO, you can compare the effects of market volatilities on KB Financial and PERRIGO 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 PERRIGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and PERRIGO.
Diversification Opportunities for KB Financial and PERRIGO
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KBIA and PERRIGO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and PERRIGO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERRIGO 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 PERRIGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERRIGO has no effect on the direction of KB Financial i.e., KB Financial and PERRIGO go up and down completely randomly.
Pair Corralation between KB Financial and PERRIGO
Assuming the 90 days trading horizon KB Financial Group is expected to under-perform the PERRIGO. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 2.66 times less risky than PERRIGO. The stock trades about -0.1 of its potential returns per unit of risk. The PERRIGO is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 56.00 in PERRIGO on September 15, 2024 and sell it today you would earn a total of 16.00 from holding PERRIGO or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KB Financial Group vs. PERRIGO
Performance |
| Timeline |
| KB Financial Group |
| PERRIGO |
KB Financial and PERRIGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KB Financial and PERRIGO
The main advantage of trading using opposite KB Financial and PERRIGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, PERRIGO 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 PERRIGO will offset losses from the drop in PERRIGO's long position.| KB Financial vs. DISTRICT METALS | KB Financial vs. Japan Tobacco | KB Financial vs. JAPAN TOBACCO UNSPADR12 | KB Financial vs. COLUMBIA SPORTSWEAR |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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