Correlation Between SBI Investment and InfoBank
Can any of the company-specific risk be diversified away by investing in both SBI Investment and InfoBank 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 SBI Investment and InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and InfoBank, you can compare the effects of market volatilities on SBI Investment and InfoBank 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 SBI Investment with a short position of InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and InfoBank.
Diversification Opportunities for SBI Investment and InfoBank
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and InfoBank is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of SBI Investment i.e., SBI Investment and InfoBank go up and down completely randomly.
Pair Corralation between SBI Investment and InfoBank
Assuming the 90 days trading horizon SBI Investment is expected to generate 2.32 times less return on investment than InfoBank. But when comparing it to its historical volatility, SBI Investment KOREA is 1.75 times less risky than InfoBank. It trades about 0.11 of its potential returns per unit of risk. InfoBank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 597,000 in InfoBank on September 1, 2024 and sell it today you would earn a total of 87,000 from holding InfoBank or generate 14.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. InfoBank
Performance |
| Timeline |
| SBI Investment KOREA |
| InfoBank |
SBI Investment and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and InfoBank
The main advantage of trading using opposite SBI Investment and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| SBI Investment vs. Ssangyong Information Communication | SBI Investment vs. Sejong Telecom | SBI Investment vs. Wireless Power Amplifier | SBI Investment vs. Daishin Information Communications |
| InfoBank vs. Dongsin Engineering Construction | InfoBank vs. Doosan Fuel Cell | InfoBank vs. Daishin Balance 1 | InfoBank vs. Total Soft Bank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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