Correlation Between BNK Financial and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both BNK Financial and Shinhan 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 BNK Financial and Shinhan Financial 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 Shinhan Financial Group, you can compare the effects of market volatilities on BNK Financial and Shinhan 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 BNK Financial with a short position of Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and Shinhan Financial.
Diversification Opportunities for BNK Financial and Shinhan Financial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BNK and Shinhan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial 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 Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of BNK Financial i.e., BNK Financial and Shinhan Financial go up and down completely randomly.
Pair Corralation between BNK Financial and Shinhan Financial
Assuming the 90 days trading horizon BNK Financial Group is expected to generate 0.74 times more return on investment than Shinhan Financial. However, BNK Financial Group is 1.34 times less risky than Shinhan Financial. It trades about 0.31 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about 0.08 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNK Financial Group vs. Shinhan Financial Group
Performance |
| Timeline |
| BNK Financial Group |
| Shinhan Financial |
BNK Financial and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNK Financial and Shinhan Financial
The main advantage of trading using opposite BNK Financial and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, Shinhan 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 Shinhan Financial will offset losses from the drop in Shinhan Financial'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 |
| Shinhan Financial vs. Samsung Life Insurance | Shinhan Financial vs. Korean Air Lines | Shinhan Financial vs. DB Financial Investment | Shinhan Financial vs. Golden Bridge Investment |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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