Correlation Between Industrial Bank and Jeil Steel

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Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Jeil Steel 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 Jeil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Jeil Steel Mfg, you can compare the effects of market volatilities on Industrial Bank and Jeil Steel 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 Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Jeil Steel.

Diversification Opportunities for Industrial Bank and Jeil Steel

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Industrial and Jeil is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg 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 Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Industrial Bank i.e., Industrial Bank and Jeil Steel go up and down completely randomly.

Pair Corralation between Industrial Bank and Jeil Steel

Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.28 times more return on investment than Jeil Steel. However, Industrial Bank is 3.61 times less risky than Jeil Steel. It trades about 0.06 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about -0.01 per unit of risk. If you would invest  1,450,000  in Industrial Bank on October 26, 2024 and sell it today you would earn a total of  58,000  from holding Industrial Bank or generate 4.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Industrial Bank  vs.  Jeil Steel Mfg

 Performance 
       Timeline  
Industrial Bank 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 4 (%) 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.
Jeil Steel Mfg 

Risk-Adjusted Performance

0 of 100

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

Industrial Bank and Jeil Steel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Industrial Bank and Jeil Steel

The main advantage of trading using opposite Industrial Bank and Jeil Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank position performs unexpectedly, Jeil Steel 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 Jeil Steel will offset losses from the drop in Jeil Steel's long position.
The idea behind Industrial Bank and Jeil Steel Mfg 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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