Correlation Between Youl Chon and Chin Yang
Can any of the company-specific risk be diversified away by investing in both Youl Chon and Chin Yang 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 Chin Yang 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 Chin Yang Chemical, you can compare the effects of market volatilities on Youl Chon and Chin Yang 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 Chin Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Chin Yang.
Diversification Opportunities for Youl Chon and Chin Yang
Good diversification
The 3 months correlation between Youl and Chin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Chin Yang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Yang 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 Chin Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Yang Chemical has no effect on the direction of Youl Chon i.e., Youl Chon and Chin Yang go up and down completely randomly.
Pair Corralation between Youl Chon and Chin Yang
Assuming the 90 days trading horizon Youl Chon Chemical is expected to under-perform the Chin Yang. In addition to that, Youl Chon is 2.03 times more volatile than Chin Yang Chemical. It trades about -0.02 of its total potential returns per unit of risk. Chin Yang Chemical is currently generating about -0.01 per unit of volatility. If you would invest 292,489 in Chin Yang Chemical on August 25, 2024 and sell it today you would lose (27,989) from holding Chin Yang Chemical or give up 9.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. Chin Yang Chemical
Performance |
| Timeline |
| Youl Chon Chemical |
| Chin Yang Chemical |
Youl Chon and Chin Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and Chin Yang
The main advantage of trading using opposite Youl Chon and Chin Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon position performs unexpectedly, Chin Yang 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 Chin Yang will offset losses from the drop in Chin Yang's long position.| Youl Chon vs. AptaBio Therapeutics | Youl Chon vs. Daewoo SBI SPAC | Youl Chon vs. Dream Security co | Youl Chon vs. Microfriend |
| Chin Yang vs. AptaBio Therapeutics | Chin Yang vs. Daewoo SBI SPAC | Chin Yang vs. Dream Security co | Chin Yang vs. Microfriend |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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