Correlation Between BNK Financial and IC Technology

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

Diversification Opportunities for BNK Financial and IC Technology

0.46

Correlation Coefficient

BNK Financial  IC Technology

Very weak diversification

The 3 months correlation between BNK and 052860 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and IC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IC 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 IC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IC Technology has no effect on the direction of BNK Financial i.e., BNK Financial and IC Technology go up and down completely randomly.

Pair Corralation between BNK Financial and IC Technology

Assuming the 90 days trading horizon BNK Financial Group is expected to generate 0.68 times more return on investment than IC Technology. However, BNK Financial Group is 1.48 times less risky than IC Technology. It trades about 0.38 of its potential returns per unit of risk. IC Technology Co is currently generating about -0.05 per unit of risk. If you would invest  1,059,000  in BNK Financial Group on October 26, 2024 and sell it today you would earn a total of  132,000  from holding BNK Financial Group or generate 12.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

BNK Financial Group  vs.  IC Technology Co

BNK Financial Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 12 (%) 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.

IC Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IC Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IC Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BNK Financial and IC Technology

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

The idea behind BNK Financial Group and IC Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.