Correlation Between Industrial Bank and Innodep
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Innodep 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 Innodep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Innodep, you can compare the effects of market volatilities on Industrial Bank and Innodep 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 Innodep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Innodep.
Diversification Opportunities for Industrial Bank and Innodep
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and Innodep is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Innodep in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodep 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 Innodep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodep has no effect on the direction of Industrial Bank i.e., Industrial Bank and Innodep go up and down completely randomly.
Pair Corralation between Industrial Bank and Innodep
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.42 times more return on investment than Innodep. However, Industrial Bank is 2.4 times less risky than Innodep. It trades about 0.1 of its potential returns per unit of risk. Innodep is currently generating about -0.03 per unit of risk. If you would invest 1,108,027 in Industrial Bank on September 4, 2024 and sell it today you would earn a total of 408,973 from holding Industrial Bank or generate 36.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Innodep
Performance |
| Timeline |
| Industrial Bank |
| Innodep |
Industrial Bank and Innodep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Innodep
The main advantage of trading using opposite Industrial Bank and Innodep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Innodep 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 Innodep will offset losses from the drop in Innodep's long position.| Industrial Bank vs. Dongjin Semichem Co | Industrial Bank vs. AhnLab Inc | Industrial Bank vs. Posco ICT | Industrial Bank vs. CJ ENM |
| Innodep vs. Lotte Non Life Insurance | Innodep vs. DC Media Co | Innodep vs. Hannong Chemicals | Innodep vs. Nasmedia 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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