Correlation Between Industrial Bank and TOPMATERIAL
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and TOPMATERIAL 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 TOPMATERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and TOPMATERIAL LTD, you can compare the effects of market volatilities on Industrial Bank and TOPMATERIAL 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 TOPMATERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and TOPMATERIAL.
Diversification Opportunities for Industrial Bank and TOPMATERIAL
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Industrial and TOPMATERIAL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and TOPMATERIAL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPMATERIAL LTD 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 TOPMATERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPMATERIAL LTD has no effect on the direction of Industrial Bank i.e., Industrial Bank and TOPMATERIAL go up and down completely randomly.
Pair Corralation between Industrial Bank and TOPMATERIAL
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.3 times more return on investment than TOPMATERIAL. However, Industrial Bank is 3.37 times less risky than TOPMATERIAL. It trades about 0.06 of its potential returns per unit of risk. TOPMATERIAL LTD is currently generating about -0.15 per unit of risk. If you would invest 1,450,000 in Industrial Bank on August 29, 2024 and sell it today you would earn a total of 19,000 from holding Industrial Bank or generate 1.31% 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. TOPMATERIAL LTD
Performance |
| Timeline |
| Industrial Bank |
| TOPMATERIAL LTD |
Industrial Bank and TOPMATERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and TOPMATERIAL
The main advantage of trading using opposite Industrial Bank and TOPMATERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, TOPMATERIAL 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 TOPMATERIAL will offset losses from the drop in TOPMATERIAL's long position.| Industrial Bank vs. TOPMATERIAL LTD | Industrial Bank vs. LS Materials | Industrial Bank vs. Taegu Broadcasting | Industrial Bank vs. Top Material Co |
| TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. Samsung Electronics Co | TOPMATERIAL vs. LG Energy Solution | TOPMATERIAL vs. SK Hynix |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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