Correlation Between Industrial Bank and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Dongwoo Farm 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 Dongwoo Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Dongwoo Farm To, you can compare the effects of market volatilities on Industrial Bank and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Dongwoo Farm.
Diversification Opportunities for Industrial Bank and Dongwoo Farm
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Dongwoo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Industrial Bank i.e., Industrial Bank and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Industrial Bank and Dongwoo Farm
Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.09 times more return on investment than Dongwoo Farm. However, Industrial Bank is 1.09 times more volatile than Dongwoo Farm To. It trades about 0.07 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.19 per unit of risk. If you would invest 1,255,515 in Industrial Bank on August 25, 2024 and sell it today you would earn a total of 224,485 from holding Industrial Bank or generate 17.88% 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. Dongwoo Farm To
Performance |
| Timeline |
| Industrial Bank |
| Dongwoo Farm To |
Industrial Bank and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Dongwoo Farm
The main advantage of trading using opposite Industrial Bank and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Industrial Bank vs. Grand Korea Leisure | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. Display Tech Co | Industrial Bank vs. Osang Healthcare Co,Ltd |
| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Wooyang Co | Dongwoo Farm vs. Asia Seed CoLtd |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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