Correlation Between Solus Advanced and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Solus 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 Solus 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 Solus Advanced Materials and Industrial Bank, you can compare the effects of market volatilities on Solus 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 Solus Advanced with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solus Advanced and Industrial Bank.
Diversification Opportunities for Solus Advanced and Industrial Bank
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solus and Industrial is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Solus 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 Solus 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 Solus 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 Solus Advanced i.e., Solus Advanced and Industrial Bank go up and down completely randomly.
Pair Corralation between Solus Advanced and Industrial Bank
Assuming the 90 days trading horizon Solus Advanced Materials is expected to generate 7.22 times more return on investment than Industrial Bank. However, Solus Advanced is 7.22 times more volatile than Industrial Bank. It trades about 0.22 of its potential returns per unit of risk. Industrial Bank is currently generating about 0.52 per unit of risk. If you would invest 818,000 in Solus Advanced Materials on November 3, 2024 and sell it today you would earn a total of 187,000 from holding Solus Advanced Materials or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solus Advanced Materials vs. Industrial Bank
Performance |
| Timeline |
| Solus Advanced Materials |
| Industrial Bank |
Solus Advanced and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solus Advanced and Industrial Bank
The main advantage of trading using opposite Solus Advanced and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus 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.| Solus Advanced vs. Samhyun Steel Co | Solus Advanced vs. Solution Advanced Technology | Solus Advanced vs. Orbitech Co | Solus Advanced vs. Dongwoon Anatech Co |
| Industrial Bank vs. Coloray International Investment | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. DSC Investment | Industrial Bank vs. Tway Air 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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