Correlation Between Koh Young and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Koh Young 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 Koh Young and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koh Young Technology and Industrial Bank, you can compare the effects of market volatilities on Koh Young 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 Koh Young with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koh Young and Industrial Bank.
Diversification Opportunities for Koh Young and Industrial Bank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Koh and Industrial is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Koh Young 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 Koh Young Technology 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 Koh Young i.e., Koh Young and Industrial Bank go up and down completely randomly.
Pair Corralation between Koh Young and Industrial Bank
Assuming the 90 days trading horizon Koh Young Technology is expected to generate 5.08 times more return on investment than Industrial Bank. However, Koh Young is 5.08 times more volatile than Industrial Bank. It trades about 0.25 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.01 per unit of risk. If you would invest 1,635,000 in Koh Young Technology on November 27, 2024 and sell it today you would earn a total of 286,000 from holding Koh Young Technology or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koh Young Technology vs. Industrial Bank
Performance |
| Timeline |
| Koh Young Technology |
| Industrial Bank |
Koh Young and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koh Young and Industrial Bank
The main advantage of trading using opposite Koh Young and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koh Young 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.The idea behind Koh Young Technology and Industrial Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Industrial Bank vs. Hanjoo Light Metal | Industrial Bank vs. Sempio Foods Co | Industrial Bank vs. Dongil Metal Co | Industrial Bank vs. Daesung Hi Tech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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