Correlation Between NICE Information and BNK Financial
Can any of the company-specific risk be diversified away by investing in both NICE Information 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 NICE Information and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICE Information Service and BNK Financial Group, you can compare the effects of market volatilities on NICE Information 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 NICE Information with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and BNK Financial.
Diversification Opportunities for NICE Information and BNK Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NICE and BNK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service 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 NICE Information 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 NICE Information Service 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 NICE Information i.e., NICE Information and BNK Financial go up and down completely randomly.
Pair Corralation between NICE Information and BNK Financial
Assuming the 90 days trading horizon NICE Information Service is expected to generate 0.7 times more return on investment than BNK Financial. However, NICE Information Service is 1.43 times less risky than BNK Financial. It trades about 0.16 of its potential returns per unit of risk. BNK Financial Group is currently generating about 0.06 per unit of risk. If you would invest 1,164,000 in NICE Information Service on September 24, 2024 and sell it today you would earn a total of 75,000 from holding NICE Information Service or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. BNK Financial Group
Performance |
| Timeline |
| NICE Information Service |
| BNK Financial Group |
NICE Information and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and BNK Financial
The main advantage of trading using opposite NICE Information and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information 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.| NICE Information vs. InfoBank | NICE Information vs. Samyang Foods Co | NICE Information vs. Lotte Chilsung Beverage | NICE Information vs. Samlip General Foods |
| BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group | BNK Financial vs. Hyundai Motor | BNK Financial vs. Hyundai Motor Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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