Correlation Between Industrial Bank and Korea Electronic
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Korea Electronic 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 Electronic 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 Electronic Certification, you can compare the effects of market volatilities on Industrial Bank and Korea Electronic 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 Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Korea Electronic.
Diversification Opportunities for Industrial Bank and Korea Electronic
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Korea is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Korea Electronic Certification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electronic Cer 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 Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electronic Cer has no effect on the direction of Industrial Bank i.e., Industrial Bank and Korea Electronic go up and down completely randomly.
Pair Corralation between Industrial Bank and Korea Electronic
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.49 times more return on investment than Korea Electronic. However, Industrial Bank is 2.04 times less risky than Korea Electronic. It trades about 0.08 of its potential returns per unit of risk. Korea Electronic Certification is currently generating about -0.03 per unit of risk. If you would invest 947,337 in Industrial Bank on September 3, 2024 and sell it today you would earn a total of 540,663 from holding Industrial Bank or generate 57.07% 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. Korea Electronic Certification
Performance |
| Timeline |
| Industrial Bank |
| Korea Electronic Cer |
Industrial Bank and Korea Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Korea Electronic
The main advantage of trading using opposite Industrial Bank and Korea Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Korea Electronic 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 Electronic will offset losses from the drop in Korea Electronic'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 |
| Korea Electronic vs. LG Display | Korea Electronic vs. Hyundai Motor | Korea Electronic vs. Hyundai Motor Co | Korea Electronic vs. Hyundai Motor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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