Correlation Between BNK Financial and Hwangkum Steel

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

Diversification Opportunities for BNK Financial and Hwangkum Steel

0.25

Correlation Coefficient

BNK Financial  Hwangkum Steel

Modest diversification

The 3 months correlation between BNK and Hwangkum is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of BNK Financial i.e., BNK Financial and Hwangkum Steel go up and down completely randomly.

Pair Corralation between BNK Financial and Hwangkum Steel

Assuming the 90 days trading horizon BNK Financial is expected to generate 1.3 times less return on investment than Hwangkum Steel. In addition to that, BNK Financial is 1.92 times more volatile than Hwangkum Steel Technology. It trades about 0.06 of its total potential returns per unit of risk. Hwangkum Steel Technology is currently generating about 0.14 per unit of volatility. If you would invest  476,954  in Hwangkum Steel Technology on December 24, 2024 and sell it today you would earn a total of  35,046  from holding Hwangkum Steel Technology or generate 7.35% 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.  Hwangkum Steel Technology

BNK Financial Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BNK Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hwangkum Steel Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hwangkum Steel Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hwangkum Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNK Financial and Hwangkum Steel

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

The idea behind BNK Financial Group and Hwangkum Steel Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.