Correlation Between InfoBank and BNK Financial
Can any of the company-specific risk be diversified away by investing in both InfoBank 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 InfoBank and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and BNK Financial Group, you can compare the effects of market volatilities on InfoBank 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 InfoBank with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and BNK Financial.
Diversification Opportunities for InfoBank and BNK Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InfoBank and BNK is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank 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 InfoBank 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 InfoBank 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 InfoBank i.e., InfoBank and BNK Financial go up and down completely randomly.
Pair Corralation between InfoBank and BNK Financial
Assuming the 90 days trading horizon InfoBank is expected to generate 2.62 times more return on investment than BNK Financial. However, InfoBank is 2.62 times more volatile than BNK Financial Group. It trades about 0.22 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 595,000 in InfoBank on August 29, 2024 and sell it today you would earn a total of 145,000 from holding InfoBank or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. BNK Financial Group
Performance |
| Timeline |
| InfoBank |
| BNK Financial Group |
InfoBank and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and BNK Financial
The main advantage of trading using opposite InfoBank and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank 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.| InfoBank vs. Daou Data Corp | InfoBank vs. Busan Industrial Co | InfoBank vs. Busan Ind | InfoBank vs. Shinhan WTI Futures |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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