Correlation Between Eyebright Medical and Industrial Bank

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

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

Diversification Opportunities for Eyebright Medical and Industrial Bank

0.25

Correlation Coefficient

Eyebright Medical  Industrial Bank

Modest diversification

The 3 months correlation between Eyebright and Industrial is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eyebright Medical Technology and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Eyebright Medical 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 Eyebright Medical Technology are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Eyebright Medical i.e., Eyebright Medical and Industrial Bank go up and down completely randomly.

Pair Corralation between Eyebright Medical and Industrial Bank

Assuming the 90 days trading horizon Eyebright Medical Technology is expected to under-perform the Industrial Bank. In addition to that, Eyebright Medical is 3.01 times more volatile than Industrial Bank Co. It trades about -0.02 of its total potential returns per unit of risk. Industrial Bank Co is currently generating about 0.09 per unit of volatility. If you would invest  1,473  in Industrial Bank Co on October 9, 2024 and sell it today you would earn a total of  470.00  from holding Industrial Bank Co or generate 31.91% return on investment over 90 days.

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

Eyebright Medical Technology  vs.  Industrial Bank Co

Eyebright Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Eyebright Medical and Industrial Bank

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

The idea behind Eyebright Medical Technology and Industrial Bank 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.