Correlation Between Industrial Bank and Global Standard

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

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

Diversification Opportunities for Industrial Bank and Global Standard

-0.46

Correlation Coefficient

Industrial Bank  Global Standard

Very good diversification

The 3 months correlation between Industrial and Global is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech 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 Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of Industrial Bank i.e., Industrial Bank and Global Standard go up and down completely randomly.

Pair Corralation between Industrial Bank and Global Standard

Assuming the 90 days trading horizon Industrial Bank is expected to generate 13.4 times less return on investment than Global Standard. But when comparing it to its historical volatility, Industrial Bank is 2.83 times less risky than Global Standard. It trades about 0.08 of its potential returns per unit of risk. Global Standard Technology is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,378,826  in Global Standard Technology on October 8, 2024 and sell it today you would earn a total of  327,174  from holding Global Standard Technology or generate 23.73% return on investment over 90 days.

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

Industrial Bank  vs.  Global Standard Technology

Industrial Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank are ranked lower than 2 (%) 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.

Global Standard Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Standard Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Global Standard is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Industrial Bank and Global Standard

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

The idea behind Industrial Bank and Global Standard Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.