Correlation Between Incar Financial and Iljin Materials
Can any of the company-specific risk be diversified away by investing in both Incar Financial and Iljin Materials 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 Incar Financial and Iljin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incar Financial Service and Iljin Materials Co, you can compare the effects of market volatilities on Incar Financial and Iljin Materials 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 Incar Financial with a short position of Iljin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incar Financial and Iljin Materials.
Diversification Opportunities for Incar Financial and Iljin Materials
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Incar and Iljin is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and Iljin Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Materials and Incar Financial 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 Incar Financial Service are associated (or correlated) with Iljin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Materials has no effect on the direction of Incar Financial i.e., Incar Financial and Iljin Materials go up and down completely randomly.
Pair Corralation between Incar Financial and Iljin Materials
Assuming the 90 days trading horizon Incar Financial Service is expected to generate 1.44 times more return on investment than Iljin Materials. However, Incar Financial is 1.44 times more volatile than Iljin Materials Co. It trades about 0.18 of its potential returns per unit of risk. Iljin Materials Co is currently generating about -0.6 per unit of risk. If you would invest 549,000 in Incar Financial Service on September 4, 2024 and sell it today you would earn a total of 87,000 from holding Incar Financial Service or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incar Financial Service vs. Iljin Materials Co
Performance |
| Timeline |
| Incar Financial Service |
| Iljin Materials |
Incar Financial and Iljin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incar Financial and Iljin Materials
The main advantage of trading using opposite Incar Financial and Iljin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incar Financial position performs unexpectedly, Iljin Materials 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 Iljin Materials will offset losses from the drop in Iljin Materials' long position.| Incar Financial vs. Busan Industrial Co | Incar Financial vs. UNISEM Co | Incar Financial vs. RPBio Inc | Incar Financial vs. Finebesteel |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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