Correlation Between Lotte Data and BNK Financial
Can any of the company-specific risk be diversified away by investing in both Lotte Data and BNK 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 Lotte Data and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Data Communication and BNK Financial Group, you can compare the effects of market volatilities on Lotte Data and BNK 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 Lotte Data with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Data and BNK Financial.
Diversification Opportunities for Lotte Data and BNK Financial
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lotte and BNK is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Data Communication and BNK Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Financial Group and Lotte Data 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 Lotte Data Communication are associated (or correlated) with BNK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Financial Group has no effect on the direction of Lotte Data i.e., Lotte Data and BNK Financial go up and down completely randomly.
Pair Corralation between Lotte Data and BNK Financial
Assuming the 90 days trading horizon Lotte Data Communication is expected to under-perform the BNK Financial. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Data Communication is 1.07 times less risky than BNK Financial. The stock trades about -0.1 of its potential returns per unit of risk. The BNK Financial Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 996,000 in BNK Financial Group on September 24, 2024 and sell it today you would earn a total of 30,000 from holding BNK Financial Group or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Data Communication vs. BNK Financial Group
Performance |
| Timeline |
| Lotte Data Communication |
| BNK Financial Group |
Lotte Data and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Data and BNK Financial
The main advantage of trading using opposite Lotte Data and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Data position performs unexpectedly, BNK 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 BNK Financial will offset losses from the drop in BNK Financial's long position.| Lotte Data vs. Lotte Chilsung Beverage | Lotte Data vs. Sejong Telecom | Lotte Data vs. SK Telecom Co | Lotte Data vs. Korea Information Communications |
| BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group | BNK Financial vs. Hyundai Motor | BNK Financial vs. Hyundai Motor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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