Correlation Between InfoBank and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both InfoBank and InnoTherapy 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 InfoBank and InnoTherapy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and InnoTherapy, you can compare the effects of market volatilities on InfoBank and InnoTherapy 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 InfoBank with a short position of InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and InnoTherapy.
Diversification Opportunities for InfoBank and InnoTherapy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between InfoBank and InnoTherapy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy and InfoBank 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 InfoBank are associated (or correlated) with InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of InfoBank i.e., InfoBank and InnoTherapy go up and down completely randomly.
Pair Corralation between InfoBank and InnoTherapy
Assuming the 90 days trading horizon InfoBank is expected to generate 7.16 times less return on investment than InnoTherapy. In addition to that, InfoBank is 1.21 times more volatile than InnoTherapy. It trades about 0.05 of its total potential returns per unit of risk. InnoTherapy is currently generating about 0.44 per unit of volatility. If you would invest 827,000 in InnoTherapy on November 7, 2024 and sell it today you would earn a total of 184,000 from holding InnoTherapy or generate 22.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. InnoTherapy
Performance |
| Timeline |
| InfoBank |
| InnoTherapy |
InfoBank and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and InnoTherapy
The main advantage of trading using opposite InfoBank and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| InfoBank vs. Samsung Electronics Co | InfoBank vs. Samsung Electronics Co | InfoBank vs. Hyundai Motor Co | InfoBank vs. Hyundai Motor |
| InnoTherapy vs. Neungyule Education | InnoTherapy vs. Daehan Synthetic Fiber | InnoTherapy vs. Hotel Shilla Co | InnoTherapy vs. Hansol Chemical 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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