Correlation Between Hannong Chemicals and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Hannong Chemicals 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 Hannong Chemicals and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannong Chemicals and Industrial Bank, you can compare the effects of market volatilities on Hannong Chemicals 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 Hannong Chemicals with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannong Chemicals and Industrial Bank.
Diversification Opportunities for Hannong Chemicals and Industrial Bank
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hannong and Industrial is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hannong Chemicals and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Hannong Chemicals 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 Hannong Chemicals 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 Hannong Chemicals i.e., Hannong Chemicals and Industrial Bank go up and down completely randomly.
Pair Corralation between Hannong Chemicals and Industrial Bank
Assuming the 90 days trading horizon Hannong Chemicals is expected to under-perform the Industrial Bank. In addition to that, Hannong Chemicals is 2.97 times more volatile than Industrial Bank. It trades about -0.23 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.19 per unit of volatility. If you would invest 1,446,000 in Industrial Bank on August 31, 2024 and sell it today you would earn a total of 63,000 from holding Industrial Bank or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannong Chemicals vs. Industrial Bank
Performance |
| Timeline |
| Hannong Chemicals |
| Industrial Bank |
Hannong Chemicals and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannong Chemicals and Industrial Bank
The main advantage of trading using opposite Hannong Chemicals and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannong Chemicals 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.| Hannong Chemicals vs. AptaBio Therapeutics | Hannong Chemicals vs. Daewoo SBI SPAC | Hannong Chemicals vs. Dream Security co | Hannong Chemicals vs. Microfriend |
| Industrial Bank vs. Hannong Chemicals | Industrial Bank vs. EBEST Investment Securities | Industrial Bank vs. DSC Investment | Industrial Bank vs. E Investment Development |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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