Correlation Between INNOX Advanced and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both INNOX Advanced 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 INNOX Advanced and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INNOX Advanced Materials and Industrial Bank, you can compare the effects of market volatilities on INNOX Advanced 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 INNOX Advanced with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of INNOX Advanced and Industrial Bank.
Diversification Opportunities for INNOX Advanced and Industrial Bank
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between INNOX and Industrial is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and INNOX Advanced 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 INNOX Advanced Materials 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 INNOX Advanced i.e., INNOX Advanced and Industrial Bank go up and down completely randomly.
Pair Corralation between INNOX Advanced and Industrial Bank
Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 2.58 times more return on investment than Industrial Bank. However, INNOX Advanced is 2.58 times more volatile than Industrial Bank. It trades about 0.23 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.03 per unit of risk. If you would invest 2,108,819 in INNOX Advanced Materials on October 30, 2024 and sell it today you would earn a total of 666,181 from holding INNOX Advanced Materials or generate 31.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INNOX Advanced Materials vs. Industrial Bank
Performance |
| Timeline |
| INNOX Advanced Materials |
| Industrial Bank |
INNOX Advanced and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INNOX Advanced and Industrial Bank
The main advantage of trading using opposite INNOX Advanced and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced 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.| INNOX Advanced vs. DAEDUCK ELECTRONICS CoLtd | INNOX Advanced vs. SungMoon Electronics Co | INNOX Advanced vs. LG Electronics | INNOX Advanced vs. Anam Electronics Co |
| Industrial Bank vs. BIT Computer Co | Industrial Bank vs. V One Tech Co | Industrial Bank vs. KMH Hitech Co | Industrial Bank vs. Dongwoon Anatech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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