Correlation Between Industrial Bank and InfoBank
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and InfoBank 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 InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and InfoBank, you can compare the effects of market volatilities on Industrial Bank and InfoBank 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 InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and InfoBank.
Diversification Opportunities for Industrial Bank and InfoBank
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Industrial and InfoBank is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank 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 InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Industrial Bank i.e., Industrial Bank and InfoBank go up and down completely randomly.
Pair Corralation between Industrial Bank and InfoBank
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.39 times more return on investment than InfoBank. However, Industrial Bank is 2.55 times less risky than InfoBank. It trades about 0.03 of its potential returns per unit of risk. InfoBank is currently generating about -0.16 per unit of risk. If you would invest 1,461,000 in Industrial Bank on October 16, 2024 and sell it today you would earn a total of 8,000 from holding Industrial Bank or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Industrial Bank vs. InfoBank
Performance |
| Timeline |
| Industrial Bank |
| InfoBank |
Industrial Bank and InfoBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and InfoBank
The main advantage of trading using opposite Industrial Bank and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, InfoBank 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 InfoBank will offset losses from the drop in InfoBank's long position.| Industrial Bank vs. Youl Chon Chemical | Industrial Bank vs. Lake Materials Co | Industrial Bank vs. Union Materials Corp | Industrial Bank vs. INNOX Advanced Materials |
| InfoBank vs. Kakao Games Corp | InfoBank vs. LG Household Healthcare | InfoBank vs. Lotte Non Life Insurance | InfoBank vs. Dgb Financial |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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