Correlation Between Industrial Bank and Sungchang Autotech
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Sungchang Autotech 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 Sungchang Autotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Sungchang Autotech Co, you can compare the effects of market volatilities on Industrial Bank and Sungchang Autotech 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 Sungchang Autotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Sungchang Autotech.
Diversification Opportunities for Industrial Bank and Sungchang Autotech
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Sungchang is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Sungchang Autotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungchang Autotech 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 Sungchang Autotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungchang Autotech has no effect on the direction of Industrial Bank i.e., Industrial Bank and Sungchang Autotech go up and down completely randomly.
Pair Corralation between Industrial Bank and Sungchang Autotech
Assuming the 90 days trading horizon Industrial Bank is expected to under-perform the Sungchang Autotech. But the stock apears to be less risky and, when comparing its historical volatility, Industrial Bank is 1.06 times less risky than Sungchang Autotech. The stock trades about -0.05 of its potential returns per unit of risk. The Sungchang Autotech Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 353,007 in Sungchang Autotech Co on October 12, 2024 and sell it today you would earn a total of 17,993 from holding Sungchang Autotech Co or generate 5.1% 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. Sungchang Autotech Co
Performance |
| Timeline |
| Industrial Bank |
| Sungchang Autotech |
Industrial Bank and Sungchang Autotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Sungchang Autotech
The main advantage of trading using opposite Industrial Bank and Sungchang Autotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Sungchang Autotech 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 Sungchang Autotech will offset losses from the drop in Sungchang Autotech's long position.| Industrial Bank vs. Namhae Chemical | Industrial Bank vs. Samsung Life Insurance | Industrial Bank vs. Hanil Chemical Ind | Industrial Bank vs. Korean Reinsurance Co |
| Sungchang Autotech vs. Jb Financial | Sungchang Autotech vs. Industrial Bank | Sungchang Autotech vs. Air Busan Co | Sungchang Autotech vs. Sejong Telecom |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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