Correlation Between Veritex Holdings and KB Financial

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

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

Diversification Opportunities for Veritex Holdings and KB Financial

0.76

Correlation Coefficient

Veritex Holdings  KB Financial

Poor diversification

The 3 months correlation between Veritex and KB Financial is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings i.e., Veritex Holdings and KB Financial go up and down completely randomly.

Pair Corralation between Veritex Holdings and KB Financial

Given the investment horizon of 90 days Veritex Holdings is expected to under-perform the KB Financial. In addition to that, Veritex Holdings is 1.0 times more volatile than KB Financial Group. It trades about -0.12 of its total potential returns per unit of risk. KB Financial Group is currently generating about -0.07 per unit of volatility. If you would invest  6,126  in KB Financial Group on January 17, 2025 and sell it today you would lose (655.00) from holding KB Financial Group or give up 10.69% of portfolio value over 90 days.

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

Veritex Holdings  vs.  KB Financial Group

Veritex Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veritex Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KB Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days KB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Veritex Holdings and KB Financial

The main advantage of trading using opposite Veritex Holdings and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings 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 Veritex Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.