Correlation Between Youl Chon and Digital Multimedia
Can any of the company-specific risk be diversified away by investing in both Youl Chon and Digital Multimedia 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 Digital Multimedia 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 Digital Multimedia Technology, you can compare the effects of market volatilities on Youl Chon and Digital Multimedia 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 Digital Multimedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Digital Multimedia.
Diversification Opportunities for Youl Chon and Digital Multimedia
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Youl and Digital is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Digital Multimedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Multimedia 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 Digital Multimedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Multimedia has no effect on the direction of Youl Chon i.e., Youl Chon and Digital Multimedia go up and down completely randomly.
Pair Corralation between Youl Chon and Digital Multimedia
Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 1.09 times more return on investment than Digital Multimedia. However, Youl Chon is 1.09 times more volatile than Digital Multimedia Technology. It trades about 0.42 of its potential returns per unit of risk. Digital Multimedia Technology is currently generating about 0.0 per unit of risk. If you would invest 2,185,000 in Youl Chon Chemical on November 7, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youl Chon Chemical vs. Digital Multimedia Technology
Performance |
| Timeline |
| Youl Chon Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Digital Multimedia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Youl Chon and Digital Multimedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youl Chon and Digital Multimedia
The main advantage of trading using opposite Youl Chon and Digital Multimedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youl Chon position performs unexpectedly, Digital Multimedia 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 Digital Multimedia will offset losses from the drop in Digital Multimedia's long position.| Youl Chon vs. PNC Technologies co | Youl Chon vs. KMH Hitech Co | Youl Chon vs. Daehan Synthetic Fiber | Youl Chon vs. SK Chemicals Co |
| Digital Multimedia vs. Ssangyong Materials Corp | Digital Multimedia vs. Korea Information Communications | Digital Multimedia vs. Kaonmedia Co | Digital Multimedia vs. FNC Entertainment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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