Correlation Between Industrial Bank and Korea Gas
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Korea Gas 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 Gas 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 Gas, you can compare the effects of market volatilities on Industrial Bank and Korea Gas 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 Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Korea Gas.
Diversification Opportunities for Industrial Bank and Korea Gas
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Korea is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of Industrial Bank i.e., Industrial Bank and Korea Gas go up and down completely randomly.
Pair Corralation between Industrial Bank and Korea Gas
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.24 times more return on investment than Korea Gas. However, Industrial Bank is 4.2 times less risky than Korea Gas. It trades about 0.23 of its potential returns per unit of risk. Korea Gas is currently generating about -0.13 per unit of risk. If you would invest 1,471,000 in Industrial Bank on November 18, 2024 and sell it today you would earn a total of 64,000 from holding Industrial Bank or generate 4.35% 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. Korea Gas
Performance |
| Timeline |
| Industrial Bank |
| Korea Gas |
Industrial Bank and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Korea Gas
The main advantage of trading using opposite Industrial Bank and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Korea Gas 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 Gas will offset losses from the drop in Korea Gas' long position.| Industrial Bank vs. SCI Information Service | Industrial Bank vs. Nable Communications | Industrial Bank vs. Daou Data Corp | Industrial Bank vs. Nice Information Telecommunication |
| Korea Gas vs. Hanjoo Light Metal | Korea Gas vs. PJ Metal Co | Korea Gas vs. Samick Musical Instruments | Korea Gas vs. Daishin Information Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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