Correlation Between Industrial Bank and Taewoong Logistics
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Taewoong Logistics 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 Taewoong Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Taewoong Logistics CoLtd, you can compare the effects of market volatilities on Industrial Bank and Taewoong Logistics 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 Taewoong Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Taewoong Logistics.
Diversification Opportunities for Industrial Bank and Taewoong Logistics
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Taewoong is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Taewoong Logistics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong Logistics CoLtd 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 Taewoong Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong Logistics CoLtd has no effect on the direction of Industrial Bank i.e., Industrial Bank and Taewoong Logistics go up and down completely randomly.
Pair Corralation between Industrial Bank and Taewoong Logistics
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.47 times more return on investment than Taewoong Logistics. However, Industrial Bank is 2.15 times less risky than Taewoong Logistics. It trades about -0.06 of its potential returns per unit of risk. Taewoong Logistics CoLtd is currently generating about -0.04 per unit of risk. If you would invest 1,460,000 in Industrial Bank on September 12, 2024 and sell it today you would lose (31,000) from holding Industrial Bank or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Taewoong Logistics CoLtd
Performance |
| Timeline |
| Industrial Bank |
| Taewoong Logistics CoLtd |
Industrial Bank and Taewoong Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Taewoong Logistics
The main advantage of trading using opposite Industrial Bank and Taewoong Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Taewoong Logistics 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 Taewoong Logistics will offset losses from the drop in Taewoong Logistics' long position.| Industrial Bank vs. Jeong Moon Information | Industrial Bank vs. LG Household Healthcare | Industrial Bank vs. Daishin Information Communications | Industrial Bank vs. CKH Food Health |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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