Correlation Between InfoBank and SBI Investment

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

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

Diversification Opportunities for InfoBank and SBI Investment

0.58

Correlation Coefficient

InfoBank  SBI Investment

Very weak diversification

The 3 months correlation between InfoBank and SBI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and InfoBank 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 InfoBank are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of InfoBank i.e., InfoBank and SBI Investment go up and down completely randomly.

Pair Corralation between InfoBank and SBI Investment

Assuming the 90 days trading horizon InfoBank is expected to generate 1.47 times less return on investment than SBI Investment. In addition to that, InfoBank is 1.17 times more volatile than SBI Investment KOREA. It trades about 0.07 of its total potential returns per unit of risk. SBI Investment KOREA is currently generating about 0.11 per unit of volatility. If you would invest  70,200  in SBI Investment KOREA on September 24, 2024 and sell it today you would earn a total of  7,700  from holding SBI Investment KOREA or generate 10.97% return on investment over 90 days.

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

InfoBank  vs.  SBI Investment KOREA

InfoBank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank sustained solid returns over the last few months and may actually be approaching a breakup point.

SBI Investment KOREA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Investment KOREA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SBI Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with InfoBank and SBI Investment

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

The idea behind InfoBank and SBI Investment KOREA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.