Correlation Between Youl Chon and GS Engineering
Can any of the company-specific risk be diversified away by investing in both Youl Chon and GS Engineering 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 Youl Chon and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youl Chon Chemical and GS Engineering Construction, you can compare the effects of market volatilities on Youl Chon and GS Engineering 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 Youl Chon with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and GS Engineering.
Diversification Opportunities for Youl Chon and GS Engineering
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Youl and 006360 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const and Youl Chon 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 Youl Chon Chemical are associated (or correlated) with GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of Youl Chon i.e., Youl Chon and GS Engineering go up and down completely randomly.
Pair Corralation between Youl Chon and GS Engineering
Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 2.45 times more return on investment than GS Engineering. However, Youl Chon is 2.45 times more volatile than GS Engineering Construction. It trades about 0.42 of its potential returns per unit of risk. GS Engineering Construction is currently generating about -0.1 per unit of risk. If you would invest 2,185,000 in Youl Chon Chemical on November 6, 2024 and sell it today you would earn a total of 875,000 from holding Youl Chon Chemical or generate 40.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. GS Engineering Construction
Performance |
| Timeline |
| Youl Chon Chemical |
| GS Engineering Const |
Youl Chon and GS Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and GS Engineering
The main advantage of trading using opposite Youl Chon and GS Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon position performs unexpectedly, GS Engineering 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 GS Engineering will offset losses from the drop in GS Engineering's long position.| Youl Chon vs. Seoul Food Industrial | Youl Chon vs. Songwon Industrial Co | Youl Chon vs. Daelim Industrial Co | Youl Chon vs. GS Retail Co |
| GS Engineering vs. Dongil Metal Co | GS Engineering vs. Atinum Investment Co | GS Engineering vs. Woori Technology Investment | GS Engineering vs. PJ Metal Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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