Correlation Between Industrial Bank and Newtree CoLtd
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Newtree CoLtd 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 Newtree CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Newtree CoLtd, you can compare the effects of market volatilities on Industrial Bank and Newtree CoLtd 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 Newtree CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Newtree CoLtd.
Diversification Opportunities for Industrial Bank and Newtree CoLtd
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Newtree is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Newtree CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtree 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 Newtree CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtree CoLtd has no effect on the direction of Industrial Bank i.e., Industrial Bank and Newtree CoLtd go up and down completely randomly.
Pair Corralation between Industrial Bank and Newtree CoLtd
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.2 times more return on investment than Newtree CoLtd. However, Industrial Bank is 5.03 times less risky than Newtree CoLtd. It trades about 0.12 of its potential returns per unit of risk. Newtree CoLtd is currently generating about -0.28 per unit of risk. If you would invest 1,453,000 in Industrial Bank on August 30, 2024 and sell it today you would earn a total of 38,000 from holding Industrial Bank or generate 2.62% 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. Newtree CoLtd
Performance |
| Timeline |
| Industrial Bank |
| Newtree CoLtd |
Industrial Bank and Newtree CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Newtree CoLtd
The main advantage of trading using opposite Industrial Bank and Newtree CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Newtree CoLtd 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 Newtree CoLtd will offset losses from the drop in Newtree CoLtd's long position.| Industrial Bank vs. TOPMATERIAL LTD | Industrial Bank vs. LS Materials | Industrial Bank vs. Taegu Broadcasting | Industrial Bank vs. Top Material Co |
| Newtree CoLtd vs. KakaoBank Corp | Newtree CoLtd vs. Pureun Mutual Savings | Newtree CoLtd vs. DB Insurance Co | Newtree CoLtd vs. SCI Information Service |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |