Correlation Between Youl Chon and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Youl Chon and Busan Ind 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 Busan Ind 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 Busan Ind, you can compare the effects of market volatilities on Youl Chon and Busan Ind 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 Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Busan Ind.
Diversification Opportunities for Youl Chon and Busan Ind
Good diversification
The 3 months correlation between Youl and Busan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind 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 Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Youl Chon i.e., Youl Chon and Busan Ind go up and down completely randomly.
Pair Corralation between Youl Chon and Busan Ind
Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 2.03 times more return on investment than Busan Ind. However, Youl Chon is 2.03 times more volatile than Busan Ind. It trades about 0.42 of its potential returns per unit of risk. Busan Ind is currently generating about 0.03 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. Busan Ind
Performance |
| Timeline |
| Youl Chon Chemical |
| Busan Ind |
Youl Chon and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and Busan Ind
The main advantage of trading using opposite Youl Chon and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind'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 |
| Busan Ind vs. Sempio Foods Co | Busan Ind vs. Sung Bo Chemicals | Busan Ind vs. Kukdo Chemical Co | Busan Ind vs. Lotte Fine Chemical |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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