Correlation Between Korea Real and BNK Financial
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Korea Real and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and BNK Financial Group, you can compare the effects of market volatilities on Korea Real 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 Korea Real with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and BNK Financial.
Diversification Opportunities for Korea Real and BNK Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and BNK is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate 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 Korea Real 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 Korea Real Estate 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 Korea Real i.e., Korea Real and BNK Financial go up and down completely randomly.
Pair Corralation between Korea Real and BNK Financial
Assuming the 90 days trading horizon Korea Real is expected to generate 16.9 times less return on investment than BNK Financial. But when comparing it to its historical volatility, Korea Real Estate is 1.95 times less risky than BNK Financial. It trades about 0.01 of its potential returns per unit of risk. BNK Financial Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 808,198 in BNK Financial Group on September 2, 2024 and sell it today you would earn a total of 247,802 from holding BNK Financial Group or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. BNK Financial Group
Performance |
| Timeline |
| Korea Real Estate |
| BNK Financial Group |
Korea Real and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and BNK Financial
The main advantage of trading using opposite Korea Real and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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.| Korea Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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