Correlation Between Industrial Bank and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Korea Alcohol 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 Korea Alcohol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Korea Alcohol Industrial, you can compare the effects of market volatilities on Industrial Bank and Korea Alcohol 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 Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Korea Alcohol.
Diversification Opportunities for Industrial Bank and Korea Alcohol
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Industrial and Korea is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of Industrial Bank i.e., Industrial Bank and Korea Alcohol go up and down completely randomly.
Pair Corralation between Industrial Bank and Korea Alcohol
Assuming the 90 days trading horizon Industrial Bank is expected to generate 11.72 times less return on investment than Korea Alcohol. But when comparing it to its historical volatility, Industrial Bank is 1.12 times less risky than Korea Alcohol. It trades about 0.01 of its potential returns per unit of risk. Korea Alcohol Industrial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 848,000 in Korea Alcohol Industrial on November 27, 2024 and sell it today you would earn a total of 11,000 from holding Korea Alcohol Industrial or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Korea Alcohol Industrial
Performance |
| Timeline |
| Industrial Bank |
| Korea Alcohol Industrial |
Industrial Bank and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Korea Alcohol
The main advantage of trading using opposite Industrial Bank and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Korea Alcohol 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 Korea Alcohol will offset losses from the drop in Korea Alcohol's long position.| Industrial Bank vs. Hanjoo Light Metal | Industrial Bank vs. Sempio Foods Co | Industrial Bank vs. Dongil Metal Co | Industrial Bank vs. Daesung Hi Tech Co |
| Korea Alcohol vs. V One Tech Co | Korea Alcohol vs. Jeju Air Co | Korea Alcohol vs. Vitzro Tech Co | Korea Alcohol vs. Hyundai Home Shopping |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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