Correlation Between Industrial Bank and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Lindeman Asia 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 Lindeman Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Lindeman Asia Investment, you can compare the effects of market volatilities on Industrial Bank and Lindeman Asia 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 Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Lindeman Asia.
Diversification Opportunities for Industrial Bank and Lindeman Asia
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Industrial and Lindeman is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment 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 Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of Industrial Bank i.e., Industrial Bank and Lindeman Asia go up and down completely randomly.
Pair Corralation between Industrial Bank and Lindeman Asia
Assuming the 90 days trading horizon Industrial Bank is expected to generate 8.06 times less return on investment than Lindeman Asia. But when comparing it to its historical volatility, Industrial Bank is 4.67 times less risky than Lindeman Asia. It trades about 0.11 of its potential returns per unit of risk. Lindeman Asia Investment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 421,500 in Lindeman Asia Investment on January 26, 2025 and sell it today you would earn a total of 128,500 from holding Lindeman Asia Investment or generate 30.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Industrial Bank vs. Lindeman Asia Investment
Performance |
| Timeline |
| Industrial Bank |
| Lindeman Asia Investment |
Industrial Bank and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Lindeman Asia
The main advantage of trading using opposite Industrial Bank and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. Samsung Electronics Co | Industrial Bank vs. Hyundai Motor Co | Industrial Bank vs. Hyundai Motor Co |
| Lindeman Asia vs. Atinum Investment Co | Lindeman Asia vs. SBI Investment KOREA | Lindeman Asia vs. Daesung Private Equity | Lindeman Asia vs. Busan 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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