Correlation Between Industrial Bank and Formetal
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Formetal 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 Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Formetal Co, you can compare the effects of market volatilities on Industrial Bank and Formetal 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 Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Formetal.
Diversification Opportunities for Industrial Bank and Formetal
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Formetal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal 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 Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Industrial Bank i.e., Industrial Bank and Formetal go up and down completely randomly.
Pair Corralation between Industrial Bank and Formetal
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.51 times more return on investment than Formetal. However, Industrial Bank is 1.97 times less risky than Formetal. It trades about 0.07 of its potential returns per unit of risk. Formetal Co is currently generating about 0.01 per unit of risk. If you would invest 983,876 in Industrial Bank on October 14, 2024 and sell it today you would earn a total of 481,124 from holding Industrial Bank or generate 48.9% 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. Formetal Co
Performance |
| Timeline |
| Industrial Bank |
| Formetal |
Industrial Bank and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Formetal
The main advantage of trading using opposite Industrial Bank and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Industrial Bank vs. Nice Information Telecommunication | Industrial Bank vs. SeAH Besteel Corp | Industrial Bank vs. Kakao Games Corp | Industrial Bank vs. LG Display Co |
| Formetal vs. Dongil Metal Co | Formetal vs. Cheryong Industrial CoLtd | Formetal vs. Industrial Bank | Formetal vs. Hyundai Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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