Correlation Between Industrial Bank and Wooyang
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Wooyang 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 Wooyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Wooyang Co, you can compare the effects of market volatilities on Industrial Bank and Wooyang 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 Wooyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Wooyang.
Diversification Opportunities for Industrial Bank and Wooyang
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Wooyang is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang 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 Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of Industrial Bank i.e., Industrial Bank and Wooyang go up and down completely randomly.
Pair Corralation between Industrial Bank and Wooyang
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.33 times more return on investment than Wooyang. However, Industrial Bank is 3.0 times less risky than Wooyang. It trades about 0.1 of its potential returns per unit of risk. Wooyang Co is currently generating about -0.03 per unit of risk. If you would invest 1,094,025 in Industrial Bank on August 25, 2024 and sell it today you would earn a total of 385,975 from holding Industrial Bank or generate 35.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Wooyang Co
Performance |
| Timeline |
| Industrial Bank |
| Wooyang |
Industrial Bank and Wooyang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Wooyang
The main advantage of trading using opposite Industrial Bank and Wooyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Wooyang 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 Wooyang will offset losses from the drop in Wooyang'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 |
| Wooyang vs. SBI Investment KOREA | Wooyang vs. Lindeman Asia Investment | Wooyang vs. SV Investment | Wooyang vs. LB Investment |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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