Correlation Between Industrial Bank and Young Poong

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

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

Diversification Opportunities for Industrial Bank and Young Poong

-0.6

Correlation Coefficient

Industrial Bank  Young Poong

Excellent diversification

The 3 months correlation between Industrial and Young is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Young Poong Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Poong Precision 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 Young Poong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Poong Precision has no effect on the direction of Industrial Bank i.e., Industrial Bank and Young Poong go up and down completely randomly.

Pair Corralation between Industrial Bank and Young Poong

Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.26 times more return on investment than Young Poong. However, Industrial Bank is 3.87 times less risky than Young Poong. It trades about 0.16 of its potential returns per unit of risk. Young Poong Precision is currently generating about -0.04 per unit of risk. If you would invest  1,468,000  in Industrial Bank on December 25, 2024 and sell it today you would earn a total of  109,000  from holding Industrial Bank or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Industrial Bank  vs.  Young Poong Precision

Industrial Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 12 (%) 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 April 2025.

Young Poong Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Young Poong Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Industrial Bank and Young Poong

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

The idea behind Industrial Bank and Young Poong Precision 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..