Correlation Between BNK Financial and Korea Information
Can any of the company-specific risk be diversified away by investing in both BNK Financial and Korea Information 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 Korea Information 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 Korea Information Engineering, you can compare the effects of market volatilities on BNK Financial and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and Korea Information.
Diversification Opportunities for BNK Financial and Korea Information
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNK and Korea is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of BNK Financial i.e., BNK Financial and Korea Information go up and down completely randomly.
Pair Corralation between BNK Financial and Korea Information
Assuming the 90 days trading horizon BNK Financial is expected to generate 1.44 times less return on investment than Korea Information. But when comparing it to its historical volatility, BNK Financial Group is 1.21 times less risky than Korea Information. It trades about 0.06 of its potential returns per unit of risk. Korea Information Engineering is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 240,500 in Korea Information Engineering on September 24, 2024 and sell it today you would earn a total of 10,500 from holding Korea Information Engineering or generate 4.37% 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. Korea Information Engineering
Performance |
| Timeline |
| BNK Financial Group |
| Korea Information |
BNK Financial and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNK Financial and Korea Information
The main advantage of trading using opposite BNK Financial and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group | BNK Financial vs. Hyundai Motor | BNK Financial vs. Hyundai Motor Co |
| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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