Correlation Between Industrial Bank and Han Kook
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Han Kook 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 Han Kook into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Han Kook Capital, you can compare the effects of market volatilities on Industrial Bank and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Han Kook.
Diversification Opportunities for Industrial Bank and Han Kook
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Han is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Industrial Bank i.e., Industrial Bank and Han Kook go up and down completely randomly.
Pair Corralation between Industrial Bank and Han Kook
Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.4 times more return on investment than Han Kook. However, Industrial Bank is 1.4 times more volatile than Han Kook Capital. It trades about 0.05 of its potential returns per unit of risk. Han Kook Capital is currently generating about 0.01 per unit of risk. If you would invest 1,450,000 in Industrial Bank on August 28, 2024 and sell it today you would earn a total of 15,000 from holding Industrial Bank or generate 1.03% 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. Han Kook Capital
Performance |
| Timeline |
| Industrial Bank |
| Han Kook Capital |
Industrial Bank and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Han Kook
The main advantage of trading using opposite Industrial Bank and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Industrial Bank vs. Shinhan Inverse Copper | Industrial Bank vs. Insung Information Co | Industrial Bank vs. Bohae Brewery | Industrial Bank vs. Shinsegae Information Communication |
| Han Kook vs. Korea New Network | Han Kook vs. Dong A Eltek | Han Kook vs. Dreamus Company | Han Kook vs. SK Bioscience 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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