Correlation Between Ilji Technology and Industrial Bank

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

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

Diversification Opportunities for Ilji Technology and Industrial Bank

-0.63

Correlation Coefficient

Ilji Technology  Industrial Bank

Excellent diversification

The 3 months correlation between Ilji and Industrial is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ilji Technology Co and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Ilji Technology 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 Ilji Technology Co are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Ilji Technology i.e., Ilji Technology and Industrial Bank go up and down completely randomly.

Pair Corralation between Ilji Technology and Industrial Bank

Assuming the 90 days trading horizon Ilji Technology Co is expected to under-perform the Industrial Bank. In addition to that, Ilji Technology is 1.85 times more volatile than Industrial Bank. It trades about -0.1 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.12 per unit of volatility. If you would invest  1,404,000  in Industrial Bank on August 31, 2024 and sell it today you would earn a total of  105,000  from holding Industrial Bank or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ilji Technology Co  vs.  Industrial Bank

Ilji Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ilji Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial Bank

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial Bank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ilji Technology and Industrial Bank

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

The idea behind Ilji Technology Co and Industrial Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.