Correlation Between LG Energy and BNK Financial
Can any of the company-specific risk be diversified away by investing in both LG Energy 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 LG Energy and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Energy Solution and BNK Financial Group, you can compare the effects of market volatilities on LG Energy 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 LG Energy with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and BNK Financial.
Diversification Opportunities for LG Energy and BNK Financial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 373220 and BNK is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution 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 LG Energy 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 LG Energy Solution 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 LG Energy i.e., LG Energy and BNK Financial go up and down completely randomly.
Pair Corralation between LG Energy and BNK Financial
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the BNK Financial. In addition to that, LG Energy is 1.79 times more volatile than BNK Financial Group. It trades about -0.03 of its total potential returns per unit of risk. BNK Financial Group is currently generating about 0.1 per unit of volatility. If you would invest 633,279 in BNK Financial Group on September 2, 2024 and sell it today you would earn a total of 422,721 from holding BNK Financial Group or generate 66.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. BNK Financial Group
Performance |
| Timeline |
| LG Energy Solution |
| BNK Financial Group |
LG Energy and BNK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and BNK Financial
The main advantage of trading using opposite LG Energy and BNK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy 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.| LG Energy vs. Daishin Information Communications | LG Energy vs. Digital Power Communications | LG Energy vs. Ssangyong Information Communication | LG Energy vs. Korean Reinsurance Co |
| BNK Financial vs. Samsung Electronics Co | BNK Financial vs. Samsung Electronics Co | BNK Financial vs. KB Financial Group | BNK Financial vs. Shinhan Financial Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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