Correlation Between Dongwon System and BNK Financial
Can any of the company-specific risk be diversified away by investing in both Dongwon System 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 Dongwon System and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongwon System and BNK Financial Group, you can compare the effects of market volatilities on Dongwon System 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 Dongwon System with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwon System and BNK Financial.
Diversification Opportunities for Dongwon System and BNK Financial
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongwon and BNK is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongwon System 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 Dongwon System 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 Dongwon System 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 Dongwon System i.e., Dongwon System and BNK Financial go up and down completely randomly.
Pair Corralation between Dongwon System and BNK Financial
Assuming the 90 days trading horizon Dongwon System is expected to generate 2.11 times less return on investment than BNK Financial. In addition to that, Dongwon System is 1.94 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 0.1 per unit of volatility. If you would invest 633,279 in BNK Financial Group on September 2, 2024 and sell it today you would earn a total of 422,721 from holding BNK Financial Group or generate 66.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongwon System vs. BNK Financial Group
Performance |
| Timeline |
| Dongwon System |
| BNK Financial Group |
Dongwon System and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongwon System and BNK Financial
The main advantage of trading using opposite Dongwon System and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongwon System 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.| Dongwon System vs. Wave Electronics Co | Dongwon System vs. Sungwoo Electronics Co | Dongwon System vs. KT Submarine Telecom | Dongwon System vs. Korea Electronic Certification |
| BNK Financial vs. Samsung Electronics Co | BNK Financial vs. Samsung Electronics Co | BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |