Correlation Between Shinhan Financial and BNK Financial
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial 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 Shinhan Financial and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and BNK Financial Group, you can compare the effects of market volatilities on Shinhan Financial 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 Shinhan Financial with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and BNK Financial.
Diversification Opportunities for Shinhan Financial and BNK Financial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shinhan and BNK is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group 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 Shinhan Financial 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 Shinhan Financial Group 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 Shinhan Financial i.e., Shinhan Financial and BNK Financial go up and down completely randomly.
Pair Corralation between Shinhan Financial and BNK Financial
Assuming the 90 days trading horizon Shinhan Financial is expected to generate 3.02 times less return on investment than BNK Financial. In addition to that, Shinhan Financial is 1.34 times more volatile than BNK Financial Group. It trades about 0.08 of its total potential returns per unit of risk. BNK Financial Group is currently generating about 0.31 per unit of volatility. If you would invest 944,000 in BNK Financial Group on September 1, 2024 and sell it today you would earn a total of 112,000 from holding BNK Financial Group or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinhan Financial Group vs. BNK Financial Group
Performance |
| Timeline |
| Shinhan Financial |
| BNK Financial Group |
Shinhan Financial and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Financial and BNK Financial
The main advantage of trading using opposite Shinhan Financial and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial 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.| Shinhan Financial vs. Nice Information Telecommunication | Shinhan Financial vs. Daishin Information Communications | Shinhan Financial vs. Samlip General Foods | Shinhan Financial vs. Hyundai Green Food |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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