Correlation Between BNK Financial and Koryo Credit

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

Diversification Opportunities for BNK Financial and Koryo Credit

0.64

Correlation Coefficient

BNK Financial  Koryo Credit

Poor diversification

The 3 months correlation between BNK and Koryo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Koryo Credit Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koryo Credit Information 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 Koryo Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koryo Credit Information has no effect on the direction of BNK Financial i.e., BNK Financial and Koryo Credit go up and down completely randomly.

Pair Corralation between BNK Financial and Koryo Credit

Assuming the 90 days trading horizon BNK Financial Group is expected to generate 2.2 times more return on investment than Koryo Credit. However, BNK Financial is 2.2 times more volatile than Koryo Credit Information. It trades about 0.1 of its potential returns per unit of risk. Koryo Credit Information is currently generating about 0.03 per unit of risk. If you would invest  927,000  in BNK Financial Group on October 6, 2024 and sell it today you would earn a total of  119,000  from holding BNK Financial Group or generate 12.84% return on investment over 90 days.

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

BNK Financial Group  vs.  Koryo Credit Information

BNK Financial Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BNK Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Koryo Credit Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koryo Credit Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Koryo Credit 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 Koryo Credit

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

The idea behind BNK Financial Group and Koryo Credit Information 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..