Correlation Between Youl Chon and Dongnam Chemical
Can any of the company-specific risk be diversified away by investing in both Youl Chon and Dongnam 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 Youl Chon and Dongnam Chemical 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 Dongnam Chemical Co, you can compare the effects of market volatilities on Youl Chon and Dongnam 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 Youl Chon with a short position of Dongnam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Dongnam Chemical.
Diversification Opportunities for Youl Chon and Dongnam Chemical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Youl and Dongnam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Dongnam Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnam Chemical 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 Dongnam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnam Chemical has no effect on the direction of Youl Chon i.e., Youl Chon and Dongnam Chemical go up and down completely randomly.
Pair Corralation between Youl Chon and Dongnam Chemical
Assuming the 90 days trading horizon Youl Chon is expected to generate 1.09 times less return on investment than Dongnam Chemical. In addition to that, Youl Chon is 2.98 times more volatile than Dongnam Chemical Co. It trades about 0.01 of its total potential returns per unit of risk. Dongnam Chemical Co is currently generating about 0.04 per unit of volatility. If you would invest 3,092,777 in Dongnam Chemical Co on November 4, 2024 and sell it today you would earn a total of 312,223 from holding Dongnam Chemical Co or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. Dongnam Chemical Co
Performance |
| Timeline |
| Youl Chon Chemical |
| Dongnam Chemical |
Youl Chon and Dongnam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and Dongnam Chemical
The main advantage of trading using opposite Youl Chon and Dongnam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon position performs unexpectedly, Dongnam 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 Dongnam Chemical will offset losses from the drop in Dongnam Chemical's long position.| Youl Chon vs. BIT Computer Co | Youl Chon vs. Nable Communications | Youl Chon vs. Inzi Display CoLtd | Youl Chon vs. Daejoo Electronic Materials |
| Dongnam Chemical vs. LAKE MATERIALS LTD | Dongnam Chemical vs. Kolon Plastics | Dongnam Chemical vs. Hana Materials | Dongnam Chemical vs. EV Advanced Material |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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