Correlation Between Industrial Bank and YOUNGHWA TECH
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and YOUNGHWA TECH 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 YOUNGHWA TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and YOUNGHWA TECH Co, you can compare the effects of market volatilities on Industrial Bank and YOUNGHWA TECH 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 YOUNGHWA TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and YOUNGHWA TECH.
Diversification Opportunities for Industrial Bank and YOUNGHWA TECH
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and YOUNGHWA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and YOUNGHWA TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YOUNGHWA TECH 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 YOUNGHWA TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YOUNGHWA TECH has no effect on the direction of Industrial Bank i.e., Industrial Bank and YOUNGHWA TECH go up and down completely randomly.
Pair Corralation between Industrial Bank and YOUNGHWA TECH
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.56 times more return on investment than YOUNGHWA TECH. However, Industrial Bank is 1.79 times less risky than YOUNGHWA TECH. It trades about 0.08 of its potential returns per unit of risk. YOUNGHWA TECH Co is currently generating about -0.02 per unit of risk. If you would invest 943,070 in Industrial Bank on September 14, 2024 and sell it today you would earn a total of 519,930 from holding Industrial Bank or generate 55.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Industrial Bank vs. YOUNGHWA TECH Co
Performance |
| Timeline |
| Industrial Bank |
| YOUNGHWA TECH |
Industrial Bank and YOUNGHWA TECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and YOUNGHWA TECH
The main advantage of trading using opposite Industrial Bank and YOUNGHWA TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, YOUNGHWA TECH 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 YOUNGHWA TECH will offset losses from the drop in YOUNGHWA TECH's long position.| Industrial Bank vs. KB Financial Group | Industrial Bank vs. Shinhan Financial Group | Industrial Bank vs. Hana Financial | Industrial Bank vs. Woori Financial Group |
| YOUNGHWA TECH vs. Ecocab Co | YOUNGHWA TECH vs. Daedong Gear Co | YOUNGHWA TECH vs. Daedong Metals Co | YOUNGHWA TECH vs. Solution Advanced Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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