Correlation Between BNK Financial and Hyundai Heavy
Can any of the company-specific risk be diversified away by investing in both BNK Financial and Hyundai Heavy 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 Hyundai Heavy 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 Hyundai Heavy Industries, you can compare the effects of market volatilities on BNK Financial and Hyundai Heavy 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 Hyundai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and Hyundai Heavy.
Diversification Opportunities for BNK Financial and Hyundai Heavy
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BNK and Hyundai is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Hyundai Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Heavy Industries 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 Hyundai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Heavy Industries has no effect on the direction of BNK Financial i.e., BNK Financial and Hyundai Heavy go up and down completely randomly.
Pair Corralation between BNK Financial and Hyundai Heavy
Assuming the 90 days trading horizon BNK Financial Group is expected to generate 0.95 times more return on investment than Hyundai Heavy. However, BNK Financial Group is 1.05 times less risky than Hyundai Heavy. It trades about 0.08 of its potential returns per unit of risk. Hyundai Heavy Industries is currently generating about -0.02 per unit of risk. If you would invest 978,000 in BNK Financial Group on August 29, 2024 and sell it today you would earn a total of 30,000 from holding BNK Financial Group or generate 3.07% 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. Hyundai Heavy Industries
Performance |
| Timeline |
| BNK Financial Group |
| Hyundai Heavy Industries |
BNK Financial and Hyundai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNK Financial and Hyundai Heavy
The main advantage of trading using opposite BNK Financial and Hyundai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, Hyundai Heavy 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 Hyundai Heavy will offset losses from the drop in Hyundai Heavy'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 |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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