Correlation Between Industrial Bank and Value Added
Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Value Added 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 Value Added into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Value Added Technology, you can compare the effects of market volatilities on Industrial Bank and Value Added 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 Value Added. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Value Added.
Diversification Opportunities for Industrial Bank and Value Added
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and Value is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Value Added Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Added Technology 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 Value Added. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Added Technology has no effect on the direction of Industrial Bank i.e., Industrial Bank and Value Added go up and down completely randomly.
Pair Corralation between Industrial Bank and Value Added
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.81 times more return on investment than Value Added. However, Industrial Bank is 1.24 times less risky than Value Added. It trades about 0.06 of its potential returns per unit of risk. Value Added Technology is currently generating about -0.16 per unit of risk. If you would invest 1,409,000 in Industrial Bank on September 15, 2024 and sell it today you would earn a total of 61,000 from holding Industrial Bank or generate 4.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Industrial Bank vs. Value Added Technology
Performance |
Timeline |
Industrial Bank |
Value Added Technology |
Industrial Bank and Value Added Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Industrial Bank and Value Added
The main advantage of trading using opposite Industrial Bank and Value Added positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Value Added 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 Value Added will offset losses from the drop in Value Added's long position.Industrial Bank vs. KB Financial Group | ||
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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