Correlation Between Truist Financial and KB Financial

Can any of the company-specific risk be diversified away by investing in both Truist Financial and KB 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 Truist Financial and KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Truist Financial and KB Financial Group, you can compare the effects of market volatilities on Truist Financial and KB 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 Truist Financial with a short position of KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and KB Financial.

Diversification Opportunities for Truist Financial and KB Financial

0.68

Correlation Coefficient

Truist Financial  KB Financial

Poor diversification

The 3 months correlation between Truist and KB Financial is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group and Truist 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 Truist Financial are associated (or correlated) with KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Truist Financial i.e., Truist Financial and KB Financial go up and down completely randomly.

Pair Corralation between Truist Financial and KB Financial

Assuming the 90 days trading horizon Truist Financial is expected to generate 10.32 times less return on investment than KB Financial. But when comparing it to its historical volatility, Truist Financial is 3.59 times less risky than KB Financial. It trades about 0.09 of its potential returns per unit of risk. KB Financial Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,865  in KB Financial Group on April 24, 2025 and sell it today you would earn a total of  2,559  from holding KB Financial Group or generate 43.63% return on investment over 90 days.

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

Truist Financial  vs.  KB Financial Group

Truist Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Truist Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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 fragile fundamental drivers, KB Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Truist Financial and KB Financial

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

The idea behind Truist Financial and KB Financial Group 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 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.