Correlation Between KB Financial and Albireo Pharma

Can any of the company-specific risk be diversified away by investing in both KB Financial and Albireo Pharma 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 Albireo Pharma 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 Albireo Pharma, you can compare the effects of market volatilities on KB Financial and Albireo Pharma 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 Albireo Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Albireo Pharma.

Diversification Opportunities for KB Financial and Albireo Pharma

-0.79

Correlation Coefficient

KB Financial Albireo Pharma

Pay attention - limited upside

The 3 months correlation between KB Financial and Albireo is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Albireo Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albireo Pharma 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 Albireo Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albireo Pharma has no effect on the direction of KB Financial i.e., KB Financial and Albireo Pharma go up and down completely randomly.

Pair Corralation between KB Financial and Albireo Pharma

Allowing for the 90-day total investment horizon KB Financial is expected to generate 7.91 times less return on investment than Albireo Pharma. But when comparing it to its historical volatility, KB Financial Group is 4.66 times less risky than Albireo Pharma. It trades about 0.07 of its potential returns per unit of risk. Albireo Pharma is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,875  in Albireo Pharma on January 1, 2023 and sell it today you would earn a total of  2,540  from holding Albireo Pharma or generate 135.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	84.0%
Values	Daily Returns

KB Financial Group  vs.  Albireo Pharma

KB Financial Group

KB Financial Performance

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Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, KB Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Albireo Pharma

Albireo Performance

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Over the last 90 days Albireo Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very conflicting fundamental drivers, Albireo Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and Albireo Pharma

The main advantage of trading using opposite KB Financial and Albireo Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Albireo Pharma 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 Albireo Pharma will offset losses from the drop in Albireo Pharma's long position.

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The idea behind KB Financial Group and Albireo Pharma 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.

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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.