Correlation Between Industrial Bank and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Leaders Technology 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 Leaders Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Leaders Technology Investment, you can compare the effects of market volatilities on Industrial Bank and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Leaders Technology.
Diversification Opportunities for Industrial Bank and Leaders Technology
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Leaders is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Industrial Bank i.e., Industrial Bank and Leaders Technology go up and down completely randomly.
Pair Corralation between Industrial Bank and Leaders Technology
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.15 times more return on investment than Leaders Technology. However, Industrial Bank is 6.77 times less risky than Leaders Technology. It trades about 0.43 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.1 per unit of risk. If you would invest 1,445,000 in Industrial Bank on October 28, 2024 and sell it today you would earn a total of 62,000 from holding Industrial Bank or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Leaders Technology Investment
Performance |
| Timeline |
| Industrial Bank |
| Leaders Technology |
Industrial Bank and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Leaders Technology
The main advantage of trading using opposite Industrial Bank and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. SK Hynix | Industrial Bank vs. HMM Co |
| Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. SK Hynix | Leaders Technology vs. HMM 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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