Correlation Between Industrial Bank and Springsnow Food

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

Diversification Opportunities for Industrial Bank and Springsnow Food

-0.44

Correlation Coefficient

Industrial Bank  Springsnow Food

Very good diversification

The 3 months correlation between Industrial and Springsnow is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and Springsnow Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Springsnow Food Group 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 Springsnow Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Springsnow Food Group has no effect on the direction of Industrial Bank i.e., Industrial Bank and Springsnow Food go up and down completely randomly.

Pair Corralation between Industrial Bank and Springsnow Food

Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.39 times less return on investment than Springsnow Food. But when comparing it to its historical volatility, Industrial Bank Co is 2.32 times less risky than Springsnow Food. It trades about 0.06 of its potential returns per unit of risk. Springsnow Food Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  835.00  in Springsnow Food Group on October 23, 2024 and sell it today you would earn a total of  29.00  from holding Springsnow Food Group or generate 3.47% 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 Co  vs.  Springsnow Food Group

Industrial Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co are ranked lower than 4 (%) 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.

Springsnow Food Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Springsnow Food Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Springsnow Food 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 Springsnow Food

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

The idea behind Industrial Bank Co and Springsnow Food Group 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.