Correlation Between Industrial Bank and Giantec Semiconductor

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

Diversification Opportunities for Industrial Bank and Giantec Semiconductor

0.65

Correlation Coefficient

Industrial Bank  Giantec Semiconductor

Poor diversification

The 3 months correlation between Industrial and Giantec is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank Co and Giantec Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giantec Semiconductor 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 Giantec Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giantec Semiconductor has no effect on the direction of Industrial Bank i.e., Industrial Bank and Giantec Semiconductor go up and down completely randomly.

Pair Corralation between Industrial Bank and Giantec Semiconductor

Assuming the 90 days trading horizon Industrial Bank is expected to generate 1.58 times less return on investment than Giantec Semiconductor. But when comparing it to its historical volatility, Industrial Bank Co is 3.25 times less risky than Giantec Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Giantec Semiconductor Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,255  in Giantec Semiconductor Corp on October 23, 2024 and sell it today you would lose (392.00) from holding Giantec Semiconductor Corp or give up 5.4% of portfolio value over 90 days.

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

Industrial Bank Co  vs.  Giantec Semiconductor Corp

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.

Giantec Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Giantec Semiconductor Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Giantec Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Industrial Bank and Giantec Semiconductor

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

The idea behind Industrial Bank Co and Giantec Semiconductor Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.