Correlation Between BNK Financial and Korea Refractories

Can any of the company-specific risk be diversified away by investing in both BNK Financial and Korea Refractories 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 Refractories 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 Refractories Co, you can compare the effects of market volatilities on BNK Financial and Korea Refractories 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 Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNK Financial and Korea Refractories.

Diversification Opportunities for BNK Financial and Korea Refractories

0.11

Correlation Coefficient

BNK Financial  Korea Refractories

Average diversification

The 3 months correlation between BNK and Korea is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories 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 Refractories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refractories has no effect on the direction of BNK Financial i.e., BNK Financial and Korea Refractories go up and down completely randomly.

Pair Corralation between BNK Financial and Korea Refractories

Assuming the 90 days trading horizon BNK Financial Group is expected to generate 1.68 times more return on investment than Korea Refractories. However, BNK Financial is 1.68 times more volatile than Korea Refractories Co. It trades about 0.07 of its potential returns per unit of risk. Korea Refractories Co is currently generating about 0.03 per unit of risk. If you would invest  1,022,496  in BNK Financial Group on December 22, 2024 and sell it today you would earn a total of  60,504  from holding BNK Financial Group or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BNK Financial Group  vs.  Korea Refractories Co

BNK Financial Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BNK Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Korea Refractories

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Refractories Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Refractories is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BNK Financial and Korea Refractories

The main advantage of trading using opposite BNK Financial and Korea Refractories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial position performs unexpectedly, Korea Refractories 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 Refractories will offset losses from the drop in Korea Refractories' long position.

The idea behind BNK Financial Group and Korea Refractories Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.