Correlation Between Industrial Bank and Nice Information

Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Nice Information 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 Industrial Bank and Nice Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industrial Bank and Nice Information Telecommunication, you can compare the effects of market volatilities on Industrial Bank and Nice Information 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 Nice Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Nice Information.

Diversification Opportunities for Industrial Bank and Nice Information

-0.47

Correlation Coefficient

Industrial Bank  Nice Information

Very good diversification

The 3 months correlation between Industrial and Nice is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel 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 are associated (or correlated) with Nice Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Information Tel has no effect on the direction of Industrial Bank i.e., Industrial Bank and Nice Information go up and down completely randomly.

Pair Corralation between Industrial Bank and Nice Information

Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.29 times more return on investment than Nice Information. However, Industrial Bank is 1.29 times more volatile than Nice Information Telecommunication. It trades about 0.07 of its potential returns per unit of risk. Nice Information Telecommunication is currently generating about -0.01 per unit of risk. If you would invest  1,389,000  in Industrial Bank on September 13, 2024 and sell it today you would earn a total of  74,000  from holding Industrial Bank or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Industrial Bank  vs.  Nice Information Telecommunica

Industrial Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nice Information Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Information Telecommunication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nice Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Industrial Bank and Nice Information

The main advantage of trading using opposite Industrial Bank and Nice Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Nice Information 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 Nice Information will offset losses from the drop in Nice Information's long position.

The idea behind Industrial Bank and Nice Information Telecommunication 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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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.