Correlation Between Industrial Bank and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on Industrial Bank and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Namhae Chemical.
Diversification Opportunities for Industrial Bank and Namhae Chemical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Namhae is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Industrial Bank i.e., Industrial Bank and Namhae Chemical go up and down completely randomly.
Pair Corralation between Industrial Bank and Namhae Chemical
Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.11 times more return on investment than Namhae Chemical. However, Industrial Bank is 1.11 times more volatile than Namhae Chemical. It trades about 0.06 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.06 per unit of risk. If you would invest 1,346,000 in Industrial Bank on September 3, 2024 and sell it today you would earn a total of 142,000 from holding Industrial Bank or generate 10.55% 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. Namhae Chemical
Performance |
| Timeline |
| Industrial Bank |
| Namhae Chemical |
Industrial Bank and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Namhae Chemical
The main advantage of trading using opposite Industrial Bank and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Industrial Bank vs. Kaonmedia Co | Industrial Bank vs. Bohae Brewery | Industrial Bank vs. Shinhan Inverse Silver | Industrial Bank vs. Digital Multimedia Technology |
| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. POSCO Holdings | Namhae Chemical vs. Hanwha Solutions | Namhae Chemical vs. Lotte Chemical Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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