Correlation Between SH Energy and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both SH Energy and Industrial Bank 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 SH Energy and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SH Energy Chemical and Industrial Bank, you can compare the effects of market volatilities on SH Energy and Industrial Bank 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 SH Energy with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SH Energy and Industrial Bank.
Diversification Opportunities for SH Energy and Industrial Bank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 002360 and Industrial is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SH Energy Chemical and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and SH Energy 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 SH Energy Chemical are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of SH Energy i.e., SH Energy and Industrial Bank go up and down completely randomly.
Pair Corralation between SH Energy and Industrial Bank
Assuming the 90 days trading horizon SH Energy Chemical is expected to under-perform the Industrial Bank. In addition to that, SH Energy is 1.87 times more volatile than Industrial Bank. It trades about -0.03 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.07 per unit of volatility. If you would invest 1,242,447 in Industrial Bank on November 3, 2024 and sell it today you would earn a total of 310,553 from holding Industrial Bank or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SH Energy Chemical vs. Industrial Bank
Performance |
| Timeline |
| SH Energy Chemical |
| Industrial Bank |
SH Energy and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SH Energy and Industrial Bank
The main advantage of trading using opposite SH Energy and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SH Energy position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| SH Energy vs. Nable Communications | SH Energy vs. CU Medical Systems | SH Energy vs. ECSTELECOM Co | SH Energy vs. Green Cross Medical |
| Industrial Bank vs. Koryo Credit Information | Industrial Bank vs. Nice Information Telecommunication | Industrial Bank vs. Nable Communications | Industrial Bank vs. Hankook Furniture Co |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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