Correlation Between Nice Information and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Nice Information and Industrial Bank 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 Nice Information and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Information Telecommunication and Industrial Bank, you can compare the effects of market volatilities on Nice Information and Industrial Bank 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 Nice Information with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and Industrial Bank.
Diversification Opportunities for Nice Information and Industrial Bank
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nice and Industrial is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Nice Information 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 Nice Information Telecommunication are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Nice Information i.e., Nice Information and Industrial Bank go up and down completely randomly.
Pair Corralation between Nice Information and Industrial Bank
Assuming the 90 days trading horizon Nice Information is expected to generate 1.36 times less return on investment than Industrial Bank. But when comparing it to its historical volatility, Nice Information Telecommunication is 1.06 times less risky than Industrial Bank. It trades about 0.04 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,438,000 in Industrial Bank on September 14, 2024 and sell it today you would earn a total of 25,000 from holding Industrial Bank or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. Industrial Bank
Performance |
| Timeline |
| Nice Information Tel |
| Industrial Bank |
Nice Information and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and Industrial Bank
The main advantage of trading using opposite Nice Information and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Nice Information vs. Cube Entertainment | Nice Information vs. Dreamus Company | Nice Information vs. LG Energy Solution | Nice Information vs. Dongwon System |
| Industrial Bank vs. KB Financial Group | Industrial Bank vs. Shinhan Financial Group | Industrial Bank vs. Hana Financial | Industrial Bank vs. Woori Financial Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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