Correlation Between Prosafe and Industrial Commercial

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

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

Diversification Opportunities for Prosafe and Industrial Commercial

-0.51

Correlation Coefficient

Prosafe  Industrial Commercial

Excellent diversification

The 3 months correlation between Prosafe and Industrial is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe and Industrial Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Commercial and Prosafe 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 Prosafe are associated (or correlated) with Industrial Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Commercial has no effect on the direction of Prosafe i.e., Prosafe and Industrial Commercial go up and down completely randomly.

Pair Corralation between Prosafe and Industrial Commercial

If you would invest  1,003  in Industrial Commercial Bank on January 31, 2024 and sell it today you would earn a total of  48.00  from holding Industrial Commercial Bank or generate 4.79% return on investment over 90 days.

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

Prosafe  vs.  Industrial Commercial Bank

Prosafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Industrial Commercial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Commercial Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Industrial Commercial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Prosafe and Industrial Commercial

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

The idea behind Prosafe and Industrial Commercial Bank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.