Correlation Between KB Financial and Lancaster Colony

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

Diversification Opportunities for KB Financial and Lancaster Colony

-0.48

Correlation Coefficient

KB Financial  Lancaster Colony

Very good diversification

The 3 months correlation between KB Financial and Lancaster is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony 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 Lancaster Colony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancaster Colony has no effect on the direction of KB Financial i.e., KB Financial and Lancaster Colony go up and down completely randomly.

Pair Corralation between KB Financial and Lancaster Colony

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 0.89 times more return on investment than Lancaster Colony. However, KB Financial Group is 1.13 times less risky than Lancaster Colony. It trades about 0.27 of its potential returns per unit of risk. Lancaster Colony is currently generating about -0.06 per unit of risk. If you would invest  5,724  in KB Financial Group on April 20, 2025 and sell it today you would earn a total of  2,550  from holding KB Financial Group or generate 44.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.65%
Values	Daily Returns

KB Financial Group  vs.  Lancaster Colony

KB Financial Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Lancaster Colony

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lancaster Colony has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with KB Financial and Lancaster Colony

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

The idea behind KB Financial Group and Lancaster Colony 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.