Correlation Between Industrial Bank and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Foodnamoo 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 Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Foodnamoo, you can compare the effects of market volatilities on Industrial Bank and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Foodnamoo.
Diversification Opportunities for Industrial Bank and Foodnamoo
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Foodnamoo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Industrial Bank i.e., Industrial Bank and Foodnamoo go up and down completely randomly.
Pair Corralation between Industrial Bank and Foodnamoo
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.46 times more return on investment than Foodnamoo. However, Industrial Bank is 2.18 times less risky than Foodnamoo. It trades about 0.06 of its potential returns per unit of risk. Foodnamoo is currently generating about -0.17 per unit of risk. If you would invest 1,446,000 in Industrial Bank on October 30, 2024 and sell it today you would earn a total of 61,000 from holding Industrial Bank or generate 4.22% 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. Foodnamoo
Performance |
| Timeline |
| Industrial Bank |
| Foodnamoo |
Industrial Bank and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Foodnamoo
The main advantage of trading using opposite Industrial Bank and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Industrial Bank vs. BIT Computer Co | Industrial Bank vs. V One Tech Co | Industrial Bank vs. KMH Hitech Co | Industrial Bank vs. Dongwoon Anatech Co |
| Foodnamoo vs. Ssangyong Information Communication | Foodnamoo vs. Sewoon Medical Co | Foodnamoo vs. Nable Communications | Foodnamoo vs. Sejong Telecom |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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