Correlation Between Industrial Bank and LEADCORP
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and LEADCORP 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 LEADCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and The LEADCORP, you can compare the effects of market volatilities on Industrial Bank and LEADCORP 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 LEADCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and LEADCORP.
Diversification Opportunities for Industrial Bank and LEADCORP
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Industrial and LEADCORP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and The LEADCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEADCORP 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 LEADCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEADCORP has no effect on the direction of Industrial Bank i.e., Industrial Bank and LEADCORP go up and down completely randomly.
Pair Corralation between Industrial Bank and LEADCORP
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.98 times more return on investment than LEADCORP. However, Industrial Bank is 1.02 times less risky than LEADCORP. It trades about 0.04 of its potential returns per unit of risk. The LEADCORP is currently generating about -0.05 per unit of risk. If you would invest 1,445,000 in Industrial Bank on October 24, 2024 and sell it today you would earn a total of 34,000 from holding Industrial Bank or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. The LEADCORP
Performance |
| Timeline |
| Industrial Bank |
| LEADCORP |
Industrial Bank and LEADCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and LEADCORP
The main advantage of trading using opposite Industrial Bank and LEADCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, LEADCORP 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 LEADCORP will offset losses from the drop in LEADCORP's long position.| Industrial Bank vs. Daejoo Electronic Materials | Industrial Bank vs. Sewoon Medical Co | Industrial Bank vs. Solus Advanced Materials | Industrial Bank vs. Top Material Co |
| LEADCORP vs. LEENO Industrial | LEADCORP vs. Kbi Metal Co | LEADCORP vs. Industrial Bank | LEADCORP vs. Dongil Metal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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