Correlation Between KB Financial and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both KB Financial and Novo Nordisk 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 Novo Nordisk 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 Novo Nordisk AS, you can compare the effects of market volatilities on KB Financial and Novo Nordisk 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 Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of KB Financial and Novo Nordisk.
Diversification Opportunities for KB Financial and Novo Nordisk
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KB Financial and Novo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS 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 Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of KB Financial i.e., KB Financial and Novo Nordisk go up and down completely randomly.
Pair Corralation between KB Financial and Novo Nordisk
Allowing for the 90-day total investment horizon KB Financial Group is expected to under-perform the Novo Nordisk. But the stock apears to be less risky and, when comparing its historical volatility, KB Financial Group is 1.66 times less risky than Novo Nordisk. The stock trades about -0.18 of its potential returns per unit of risk. The Novo Nordisk AS is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 10,867 in Novo Nordisk AS on December 1, 2024 and sell it today you would lose (1,802) from holding Novo Nordisk AS or give up 16.58% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KB Financial Group vs. Novo Nordisk AS
Performance |
Timeline |
KB Financial Group |
Novo Nordisk AS |
KB Financial and Novo Nordisk Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KB Financial and Novo Nordisk
The main advantage of trading using opposite KB Financial and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KB Financial position performs unexpectedly, Novo Nordisk 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 Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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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 the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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