Correlation Between DB Insurance and BNK Financial
Can any of the company-specific risk be diversified away by investing in both DB Insurance 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 DB Insurance and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DB Insurance Co and BNK Financial Group, you can compare the effects of market volatilities on DB Insurance 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 DB Insurance with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DB Insurance and BNK Financial.
Diversification Opportunities for DB Insurance and BNK Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 005830 and BNK is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DB Insurance Co 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 DB Insurance 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 DB Insurance Co 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 DB Insurance i.e., DB Insurance and BNK Financial go up and down completely randomly.
Pair Corralation between DB Insurance and BNK Financial
Assuming the 90 days trading horizon DB Insurance Co is expected to generate 1.6 times more return on investment than BNK Financial. However, DB Insurance is 1.6 times more volatile than BNK Financial Group. It trades about 0.07 of its potential returns per unit of risk. BNK Financial Group is currently generating about 0.08 per unit of risk. If you would invest 5,389,482 in DB Insurance Co on August 29, 2024 and sell it today you would earn a total of 4,940,518 from holding DB Insurance Co or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DB Insurance Co vs. BNK Financial Group
Performance |
| Timeline |
| DB Insurance |
| BNK Financial Group |
DB Insurance and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DB Insurance and BNK Financial
The main advantage of trading using opposite DB Insurance and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DB Insurance 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.| DB Insurance vs. Cube Entertainment | DB Insurance vs. Dreamus Company | DB Insurance vs. LG Energy Solution | DB Insurance vs. Dongwon System |
| BNK Financial vs. Kukdong Oil Chemicals | BNK Financial vs. Stic Investments | BNK Financial vs. Daejung Chemicals Metals | BNK Financial vs. DSC 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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