Correlation Between Youl Chon and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Youl Chon 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 Youl Chon and Youngchang 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 Youngchang Chemical Co, you can compare the effects of market volatilities on Youl Chon 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 Youl Chon with a short position of Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Youngchang Chemical.
Diversification Opportunities for Youl Chon and Youngchang Chemical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Youl and Youngchang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang 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 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 Youl Chon i.e., Youl Chon and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Youl Chon and Youngchang Chemical
Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 1.05 times more return on investment than Youngchang Chemical. However, Youl Chon is 1.05 times more volatile than Youngchang Chemical Co. It trades about -0.23 of its potential returns per unit of risk. Youngchang Chemical Co is currently generating about -0.26 per unit of risk. If you would invest 2,840,000 in Youl Chon Chemical on August 29, 2024 and sell it today you would lose (475,000) from holding Youl Chon Chemical or give up 16.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. Youngchang Chemical Co
Performance |
| Timeline |
| Youl Chon Chemical |
| Youngchang Chemical |
Youl Chon and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and Youngchang Chemical
The main advantage of trading using opposite Youl Chon and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon 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.| Youl Chon vs. Samhyun Steel Co | Youl Chon vs. Han Kook Steel | Youl Chon vs. Daechang Steel Co | Youl Chon vs. CKH Food Health |
| Youngchang Chemical vs. Dongbu Steel Co | Youngchang Chemical vs. J Steel Co | Youngchang Chemical vs. Ni Steel | Youngchang Chemical vs. Sungchang Autotech 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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