Correlation Between IC Technology and InfoBank

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

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

Diversification Opportunities for IC Technology and InfoBank

0.33

Correlation Coefficient

IC Technology  InfoBank

Weak diversification

The 3 months correlation between 052860 and InfoBank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding IC Technology Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and IC 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 IC Technology Co are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of IC Technology i.e., IC Technology and InfoBank go up and down completely randomly.

Pair Corralation between IC Technology and InfoBank

Assuming the 90 days trading horizon IC Technology Co is expected to under-perform the InfoBank. But the stock apears to be less risky and, when comparing its historical volatility, IC Technology Co is 2.42 times less risky than InfoBank. The stock trades about -0.05 of its potential returns per unit of risk. The InfoBank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  660,000  in InfoBank on August 31, 2024 and sell it today you would earn a total of  46,000  from holding InfoBank or generate 6.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

IC Technology Co  vs.  InfoBank

IC Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

InfoBank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IC Technology and InfoBank

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

The idea behind IC Technology Co and InfoBank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.