Correlation Between BNK Financial and PJ Metal

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

Diversification Opportunities for BNK Financial and PJ Metal

0.38

Correlation Coefficient

BNK Financial  PJ Metal

Weak diversification

The 3 months correlation between BNK and 128660 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and PJ Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJ Metal 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 PJ Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJ Metal has no effect on the direction of BNK Financial i.e., BNK Financial and PJ Metal go up and down completely randomly.

Pair Corralation between BNK Financial and PJ Metal

Assuming the 90 days trading horizon BNK Financial is expected to generate 1.37 times less return on investment than PJ Metal. But when comparing it to its historical volatility, BNK Financial Group is 1.05 times less risky than PJ Metal. It trades about 0.06 of its potential returns per unit of risk. PJ Metal Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  280,250  in PJ Metal Co on December 2, 2024 and sell it today you would earn a total of  25,250  from holding PJ Metal Co or generate 9.01% 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.  PJ Metal Co

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 weak basic indicators, BNK Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PJ Metal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PJ Metal Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PJ Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNK Financial and PJ Metal

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

The idea behind BNK Financial Group and PJ Metal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.