Correlation Between KB Financial and UMB Financial

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

Diversification Opportunities for KB Financial and UMB Financial

0.81

Correlation Coefficient

KB Financial  UMB Financial

Very poor diversification

The 3 months correlation between KB Financial and UMB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding KB Financial Group and UMB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMB 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 UMB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMB Financial has no effect on the direction of KB Financial i.e., KB Financial and UMB Financial go up and down completely randomly.

Pair Corralation between KB Financial and UMB Financial

Allowing for the 90-day total investment horizon KB Financial Group is expected to generate 1.26 times more return on investment than UMB Financial. However, KB Financial is 1.26 times more volatile than UMB Financial. It trades about 0.26 of its potential returns per unit of risk. UMB Financial is currently generating about 0.18 per unit of risk. If you would invest  5,724  in KB Financial Group on April 21, 2025 and sell it today you would earn a total of  2,445  from holding KB Financial Group or generate 42.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

KB Financial Group  vs.  UMB Financial

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 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

UMB Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UMB Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental drivers, UMB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KB Financial and UMB Financial

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

The idea behind KB Financial Group and UMB 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.