Correlation Between KB Financial and Capitol Federal

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

Diversification Opportunities for KB Financial and Capitol Federal

0.64

Correlation Coefficient

KB Financial  Capitol Federal

Poor diversification

The 3 months correlation between KB Financial and Capitol is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial 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 Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of KB Financial i.e., KB Financial and Capitol Federal go up and down completely randomly.

Pair Corralation between KB Financial and Capitol Federal

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.78 times more return on investment than Capitol Federal. However, KB Financial is 1.78 times more volatile than Capitol Federal Financial. It trades about 0.15 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.05 per unit of risk. If you would invest  6,602  in KB Financial Group on May 9, 2025 and sell it today you would earn a total of  1,661  from holding KB Financial Group or generate 25.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

KB Financial Group  vs.  Capitol Federal Financial

KB Financial Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KB Financial Group are ranked lower than 11 (%) 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.

Capitol Federal Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Capitol Federal is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KB Financial and Capitol Federal

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

The idea behind KB Financial Group and Capitol Federal Financial 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.