Correlation Between Top Material and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Top Material 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 Top Material and Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Industrial Bank, you can compare the effects of market volatilities on Top Material 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 Top Material with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Industrial Bank.
Diversification Opportunities for Top Material and Industrial Bank
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Top and Industrial is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Top Material 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 Top Material Co 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 Top Material i.e., Top Material and Industrial Bank go up and down completely randomly.
Pair Corralation between Top Material and Industrial Bank
Assuming the 90 days trading horizon Top Material Co is expected to under-perform the Industrial Bank. In addition to that, Top Material is 3.37 times more volatile than Industrial Bank. It trades about -0.15 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.06 per unit of volatility. If you would invest 1,450,000 in Industrial Bank on August 29, 2024 and sell it today you would earn a total of 19,000 from holding Industrial Bank or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Industrial Bank
Performance |
| Timeline |
| Top Material |
| Industrial Bank |
Top Material and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Industrial Bank
The main advantage of trading using opposite Top Material and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material 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.| Top Material vs. Korea Refract | Top Material vs. Korea Refractories Co | Top Material vs. Shinhan Inverse WTI | Top Material vs. SAMYOUNG M Tek Co |
| Industrial Bank vs. TOPMATERIAL LTD | Industrial Bank vs. LS Materials | Industrial Bank vs. Taegu Broadcasting | Industrial Bank vs. Top Material 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 CEOs Directory module to screen CEOs from public companies around the world.
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