Correlation Between Industrial Bank and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Posco Chemical 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 Industrial Bank and Posco Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Posco Chemical Co, you can compare the effects of market volatilities on Industrial Bank and Posco Chemical 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 Industrial Bank with a short position of Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Posco Chemical.
Diversification Opportunities for Industrial Bank and Posco Chemical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Posco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical and Industrial Bank 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 Industrial Bank are associated (or correlated) with Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of Industrial Bank i.e., Industrial Bank and Posco Chemical go up and down completely randomly.
Pair Corralation between Industrial Bank and Posco Chemical
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.41 times more return on investment than Posco Chemical. However, Industrial Bank is 2.46 times less risky than Posco Chemical. It trades about 0.06 of its potential returns per unit of risk. Posco Chemical Co is currently generating about -0.24 per unit of risk. If you would invest 1,443,000 in Industrial Bank on September 13, 2024 and sell it today you would earn a total of 25,000 from holding Industrial Bank or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Posco Chemical Co
Performance |
| Timeline |
| Industrial Bank |
| Posco Chemical |
Industrial Bank and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Posco Chemical
The main advantage of trading using opposite Industrial Bank and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Posco Chemical 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 Posco Chemical will offset losses from the drop in Posco Chemical's long position.| Industrial Bank vs. Nice Information Telecommunication | Industrial Bank vs. Lotte Data Communication | Industrial Bank vs. DataSolution | Industrial Bank vs. NICE Information Service |
| Posco Chemical vs. Dong A Steel Technology | Posco Chemical vs. Netmarble Games Corp | Posco Chemical vs. Guyoung Technology Co | Posco Chemical vs. Hwangkum Steel Technology |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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