Correlation Between Korea Industrial and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Korea Industrial and Youngchang Chemical 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 Korea Industrial and Youngchang Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Industrial Co and Youngchang Chemical Co, you can compare the effects of market volatilities on Korea Industrial and Youngchang Chemical 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 Korea Industrial with a short position of Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Industrial and Youngchang Chemical.
Diversification Opportunities for Korea Industrial and Youngchang Chemical
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korea and Youngchang is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Korea Industrial Co and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang Chemical and Korea Industrial 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 Korea Industrial Co are associated (or correlated) with Youngchang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngchang Chemical has no effect on the direction of Korea Industrial i.e., Korea Industrial and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Korea Industrial and Youngchang Chemical
Assuming the 90 days trading horizon Korea Industrial Co is expected to under-perform the Youngchang Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Korea Industrial Co is 1.41 times less risky than Youngchang Chemical. The stock trades about 0.0 of its potential returns per unit of risk. The Youngchang Chemical Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,364,738 in Youngchang Chemical Co on October 30, 2024 and sell it today you would earn a total of 790,262 from holding Youngchang Chemical Co or generate 57.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Industrial Co vs. Youngchang Chemical Co
Performance |
| Timeline |
| Korea Industrial |
| Youngchang Chemical |
Korea Industrial and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Industrial and Youngchang Chemical
The main advantage of trading using opposite Korea Industrial and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Industrial position performs unexpectedly, Youngchang Chemical 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 Youngchang Chemical will offset losses from the drop in Youngchang Chemical's long position.| Korea Industrial vs. INFINITT Healthcare Co | Korea Industrial vs. LG Household Healthcare | Korea Industrial vs. Fine Besteel Co | Korea Industrial vs. Hwangkum Steel Technology |
| Youngchang Chemical vs. SBI Investment KOREA | Youngchang Chemical vs. Homecast CoLtd | Youngchang Chemical vs. DB Financial Investment | Youngchang Chemical vs. Coloray International Investment |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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