Correlation Between SH Energy and BNK Financial
Can any of the company-specific risk be diversified away by investing in both SH Energy and BNK 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 SH Energy and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and BNK Financial Group, you can compare the effects of market volatilities on SH Energy and BNK 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 SH Energy with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and BNK Financial.
Diversification Opportunities for SH Energy and BNK Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 002360 and BNK is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and BNK Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Financial Group and SH Energy 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 SH Energy Chemical are associated (or correlated) with BNK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Financial Group has no effect on the direction of SH Energy i.e., SH Energy and BNK Financial go up and down completely randomly.
Pair Corralation between SH Energy and BNK Financial
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the BNK Financial. In addition to that, SH Energy is 1.62 times more volatile than BNK Financial Group. It trades about -0.02 of its total potential returns per unit of risk. BNK Financial Group is currently generating about 0.07 per unit of volatility. If you would invest 661,608 in BNK Financial Group on October 16, 2024 and sell it today you would earn a total of 432,392 from holding BNK Financial Group or generate 65.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. BNK Financial Group
Performance |
| Timeline |
| SH Energy Chemical |
| BNK Financial Group |
SH Energy and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and BNK Financial
The main advantage of trading using opposite SH Energy and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, BNK 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 BNK Financial will offset losses from the drop in BNK Financial's long position.| SH Energy vs. Hankuk Steel Wire | SH Energy vs. Shinhan Inverse Silver | SH Energy vs. PI Advanced Materials | SH Energy vs. Cuckoo Homesys Co |
| BNK Financial vs. Daejung Chemicals Metals | BNK Financial vs. Kukdong Oil Chemicals | BNK Financial vs. SH Energy Chemical | BNK Financial vs. Hanil Chemical Ind |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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