Correlation Between Industrial Commercial and Industrial

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

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

Diversification Opportunities for Industrial Commercial and Industrial

0.52

Correlation Coefficient

Industrial Commercial  Industrial

Very weak diversification

The 3 months correlation between Industrial and Industrial is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Commercial Bank and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Industrial Commercial 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 Commercial Bank are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Industrial Commercial i.e., Industrial Commercial and Industrial go up and down completely randomly.

Pair Corralation between Industrial Commercial and Industrial

Assuming the 90 days horizon Industrial Commercial Bank is expected to generate 0.96 times more return on investment than Industrial. However, Industrial Commercial Bank is 1.04 times less risky than Industrial. It trades about 0.08 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.05 per unit of risk. If you would invest  1,083  in Industrial Commercial Bank on September 4, 2024 and sell it today you would earn a total of  125.00  from holding Industrial Commercial Bank or generate 11.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Industrial Commercial Bank  vs.  Industrial and Commercial

Industrial Commercial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Commercial Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Industrial Commercial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Industrial and Commercial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Industrial Commercial and Industrial

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

The idea behind Industrial Commercial Bank and Industrial and Commercial 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.