Correlation Between BNK Financial and InfoBank
Can any of the company-specific risk be diversified away by investing in both BNK Financial and InfoBank 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 InfoBank 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 InfoBank, you can compare the effects of market volatilities on BNK Financial and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and InfoBank.
Diversification Opportunities for BNK Financial and InfoBank
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BNK and InfoBank is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of BNK Financial i.e., BNK Financial and InfoBank go up and down completely randomly.
Pair Corralation between BNK Financial and InfoBank
Assuming the 90 days trading horizon BNK Financial is expected to generate 7.18 times less return on investment than InfoBank. But when comparing it to its historical volatility, BNK Financial Group is 2.62 times less risky than InfoBank. It trades about 0.08 of its potential returns per unit of risk. InfoBank is currently generating about 0.22 of returns per unit of risk over similar time horizon. 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 |
BNK Financial Group vs. InfoBank
Performance |
| Timeline |
| BNK Financial Group |
| InfoBank |
BNK Financial and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNK Financial and InfoBank
The main advantage of trading using opposite BNK Financial and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| BNK Financial vs. Kukdong Oil Chemicals | BNK Financial vs. Stic Investments | BNK Financial vs. Daejung Chemicals Metals | BNK Financial vs. DSC Investment |
| InfoBank vs. Daou Data Corp | InfoBank vs. Busan Industrial Co | InfoBank vs. Busan Ind | InfoBank vs. Shinhan WTI Futures |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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