Correlation Between INDCOMMBK CHINA and Obayashi
Can any of the company-specific risk be diversified away by investing in both INDCOMMBK CHINA and Obayashi 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 INDCOMMBK CHINA and Obayashi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and Obayashi, you can compare the effects of market volatilities on INDCOMMBK CHINA and Obayashi 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 INDCOMMBK CHINA with a short position of Obayashi. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDCOMMBK CHINA and Obayashi.
Diversification Opportunities for INDCOMMBK CHINA and Obayashi
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDCOMMBK and Obayashi is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and Obayashi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obayashi and INDCOMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with Obayashi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obayashi has no effect on the direction of INDCOMMBK CHINA i.e., INDCOMMBK CHINA and Obayashi go up and down completely randomly.
Pair Corralation between INDCOMMBK CHINA and Obayashi
Assuming the 90 days trading horizon INDCOMMBK CHINA is expected to generate 10.59 times less return on investment than Obayashi. But when comparing it to its historical volatility, INDCOMMBK CHINA ADR20 is 1.51 times less risky than Obayashi. It trades about 0.03 of its potential returns per unit of risk. Obayashi is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,070 in Obayashi on August 30, 2024 and sell it today you would earn a total of 170.00 from holding Obayashi or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. Obayashi
Performance |
| Timeline |
| INDCOMMBK CHINA ADR20 |
| Obayashi |
INDCOMMBK CHINA and Obayashi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDCOMMBK CHINA and Obayashi
The main advantage of trading using opposite INDCOMMBK CHINA and Obayashi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDCOMMBK CHINA position performs unexpectedly, Obayashi 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 Obayashi will offset losses from the drop in Obayashi's long position.| INDCOMMBK CHINA vs. Industrial and Commercial | INDCOMMBK CHINA vs. CHINA BANK ADR20 | INDCOMMBK CHINA vs. AGRICULTBK HADR25 YC | INDCOMMBK CHINA vs. BANK OCHINA H |
| Obayashi vs. FIREWEED METALS P | Obayashi vs. Virtus Investment Partners | Obayashi vs. Genco Shipping Trading | Obayashi vs. SBM OFFSHORE |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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