Correlation Between BNK Financial and Sejong Telecom
Can any of the company-specific risk be diversified away by investing in both BNK Financial and Sejong Telecom 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 BNK Financial and Sejong Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNK Financial Group and Sejong Telecom, you can compare the effects of market volatilities on BNK Financial and Sejong Telecom 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 BNK Financial with a short position of Sejong Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and Sejong Telecom.
Diversification Opportunities for BNK Financial and Sejong Telecom
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between BNK and Sejong is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Sejong Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Telecom and BNK 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 BNK Financial Group are associated (or correlated) with Sejong Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Telecom has no effect on the direction of BNK Financial i.e., BNK Financial and Sejong Telecom go up and down completely randomly.
Pair Corralation between BNK Financial and Sejong Telecom
Assuming the 90 days trading horizon BNK Financial Group is expected to generate 1.41 times more return on investment than Sejong Telecom. However, BNK Financial is 1.41 times more volatile than Sejong Telecom. It trades about 0.31 of its potential returns per unit of risk. Sejong Telecom is currently generating about -0.45 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNK Financial Group vs. Sejong Telecom
Performance |
| Timeline |
| BNK Financial Group |
| Sejong Telecom |
BNK Financial and Sejong Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNK Financial and Sejong Telecom
The main advantage of trading using opposite BNK Financial and Sejong Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, Sejong Telecom 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 Sejong Telecom will offset losses from the drop in Sejong Telecom's long position.| BNK Financial vs. Samsung Electronics Co | BNK Financial vs. Samsung Electronics Co | BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group |
| Sejong Telecom vs. AfreecaTV Co | Sejong Telecom vs. Seegene | Sejong Telecom vs. SS TECH | Sejong Telecom vs. Busan Industrial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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