Correlation Between Jeju Beer and BNK Financial

Can any of the company-specific risk be diversified away by investing in both Jeju Beer and BNK Financial 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 Jeju Beer and BNK Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jeju Beer Co and BNK Financial Group, you can compare the effects of market volatilities on Jeju Beer and BNK Financial 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 Jeju Beer with a short position of BNK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Beer and BNK Financial.

Diversification Opportunities for Jeju Beer and BNK Financial

0.22

Correlation Coefficient

Jeju Beer  BNK Financial

Modest diversification

The 3 months correlation between Jeju and BNK is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and BNK Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Financial Group and Jeju Beer 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 Jeju Beer Co are associated (or correlated) with BNK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Financial Group has no effect on the direction of Jeju Beer i.e., Jeju Beer and BNK Financial go up and down completely randomly.

Pair Corralation between Jeju Beer and BNK Financial

Assuming the 90 days trading horizon Jeju Beer is expected to generate 10.62 times less return on investment than BNK Financial. In addition to that, Jeju Beer is 2.0 times more volatile than BNK Financial Group. It trades about 0.01 of its total potential returns per unit of risk. BNK Financial Group is currently generating about 0.13 per unit of volatility. If you would invest  904,000  in BNK Financial Group on September 28, 2024 and sell it today you would earn a total of  155,000  from holding BNK Financial Group or generate 17.15% return on investment over 90 days.

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

Jeju Beer Co  vs.  BNK Financial Group

Jeju Beer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeju Beer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Jeju Beer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BNK Financial Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 10 (%) 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.

Pair Trading with Jeju Beer and BNK Financial

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

The idea behind Jeju Beer Co and BNK Financial Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.