Correlation Between Industrial Bank and Simei Media

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

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

Diversification Opportunities for Industrial Bank and Simei Media

0.01

Correlation Coefficient

Industrial Bank  Simei Media

Significant diversification

The 3 months correlation between Industrial and Simei is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and Simei Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simei Media 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 Co are associated (or correlated) with Simei Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simei Media has no effect on the direction of Industrial Bank i.e., Industrial Bank and Simei Media go up and down completely randomly.

Pair Corralation between Industrial Bank and Simei Media

Assuming the 90 days trading horizon Industrial Bank Co is expected to generate 0.33 times more return on investment than Simei Media. However, Industrial Bank Co is 3.02 times less risky than Simei Media. It trades about 0.16 of its potential returns per unit of risk. Simei Media Co is currently generating about 0.03 per unit of risk. If you would invest  1,922  in Industrial Bank Co on December 26, 2024 and sell it today you would earn a total of  226.00  from holding Industrial Bank Co or generate 11.76% return on investment over 90 days.

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

Industrial Bank Co  vs.  Simei Media Co

Industrial Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co 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.

Simei Media

Risk-Adjusted Performance

Weak

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

Pair Trading with Industrial Bank and Simei Media

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

The idea behind Industrial Bank Co and Simei Media Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.