Correlation Between Sabra Health and KB Financial
Can any of the company-specific risk be diversified away by investing in both Sabra Health and KB Financial 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 Sabra Health and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabra Health Care and KB Financial Group, you can compare the effects of market volatilities on Sabra Health and KB Financial 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 Sabra Health with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and KB Financial.
Diversification Opportunities for Sabra Health and KB Financial
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and KBIA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Sabra Health 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 Sabra Health Care are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Sabra Health i.e., Sabra Health and KB Financial go up and down completely randomly.
Pair Corralation between Sabra Health and KB Financial
Assuming the 90 days horizon Sabra Health is expected to generate 1.35 times less return on investment than KB Financial. But when comparing it to its historical volatility, Sabra Health Care is 1.37 times less risky than KB Financial. It trades about 0.07 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,305 in KB Financial Group on August 26, 2024 and sell it today you would earn a total of 3,345 from holding KB Financial Group or generate 101.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. KB Financial Group
Performance |
| Timeline |
| Sabra Health Care |
| KB Financial Group |
Sabra Health and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and KB Financial
The main advantage of trading using opposite Sabra Health and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.The idea behind Sabra Health Care and KB Financial Group 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.| KB Financial vs. Bausch Health Companies | KB Financial vs. Benchmark Electronics | KB Financial vs. Sabra Health Care | KB Financial vs. Ramsay Health Care |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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