Correlation Between Industrial Bank and Vats Liquor

Can any of the company-specific risk be diversified away by investing in both Industrial Bank and Vats Liquor 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 Vats Liquor 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 Vats Liquor Chain, you can compare the effects of market volatilities on Industrial Bank and Vats Liquor 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 Vats Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Vats Liquor.

Diversification Opportunities for Industrial Bank and Vats Liquor

-0.07

Correlation Coefficient

Industrial Bank  Vats Liquor

Good diversification

The 3 months correlation between Industrial and Vats is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and Vats Liquor Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vats Liquor Chain 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 Vats Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vats Liquor Chain has no effect on the direction of Industrial Bank i.e., Industrial Bank and Vats Liquor go up and down completely randomly.

Pair Corralation between Industrial Bank and Vats Liquor

Assuming the 90 days trading horizon Industrial Bank Co is expected to generate 0.31 times more return on investment than Vats Liquor. However, Industrial Bank Co is 3.2 times less risky than Vats Liquor. It trades about 0.09 of its potential returns per unit of risk. Vats Liquor Chain is currently generating about -0.11 per unit of risk. If you would invest  1,854  in Industrial Bank Co on October 8, 2024 and sell it today you would earn a total of  38.00  from holding Industrial Bank Co or generate 2.05% return on investment over 90 days.

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

Industrial Bank Co  vs.  Vats Liquor Chain

Industrial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Bank Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Vats Liquor Chain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vats Liquor Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Industrial Bank and Vats Liquor

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

The idea behind Industrial Bank Co and Vats Liquor Chain 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.