Correlation Between Industrial Bank and Lepu Medical
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By analyzing existing cross correlation between Industrial Bank Co and Lepu Medical Tech, you can compare the effects of market volatilities on Industrial Bank and Lepu Medical 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 Industrial Bank with a short position of Lepu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Lepu Medical.
Diversification Opportunities for Industrial Bank and Lepu Medical
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Lepu is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and Lepu Medical Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lepu Medical Tech and Industrial Bank 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 Industrial Bank Co are associated (or correlated) with Lepu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lepu Medical Tech has no effect on the direction of Industrial Bank i.e., Industrial Bank and Lepu Medical go up and down completely randomly.
Pair Corralation between Industrial Bank and Lepu Medical
Assuming the 90 days trading horizon Industrial Bank Co is expected to generate 0.61 times more return on investment than Lepu Medical. However, Industrial Bank Co is 1.64 times less risky than Lepu Medical. It trades about 0.34 of its potential returns per unit of risk. Lepu Medical Tech is currently generating about -0.26 per unit of risk. If you would invest 1,822 in Industrial Bank Co on October 17, 2024 and sell it today you would earn a total of 139.00 from holding Industrial Bank Co or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank Co vs. Lepu Medical Tech
Performance |
| Timeline |
| Industrial Bank |
| Lepu Medical Tech |
Industrial Bank and Lepu Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Lepu Medical
The main advantage of trading using opposite Industrial Bank and Lepu Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Lepu Medical 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 Lepu Medical will offset losses from the drop in Lepu Medical's long position.The idea behind Industrial Bank Co and Lepu Medical Tech 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.
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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