Correlation Between Youngbo Chemical and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and Korean Reinsurance 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 Youngbo Chemical and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youngbo Chemical Co and Korean Reinsurance Co, you can compare the effects of market volatilities on Youngbo Chemical and Korean Reinsurance 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 Youngbo Chemical with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and Korean Reinsurance.
Diversification Opportunities for Youngbo Chemical and Korean Reinsurance
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Youngbo and Korean is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Youngbo Chemical 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 Youngbo Chemical Co are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Youngbo Chemical and Korean Reinsurance
Assuming the 90 days trading horizon Youngbo Chemical is expected to generate 1.1 times less return on investment than Korean Reinsurance. But when comparing it to its historical volatility, Youngbo Chemical Co is 1.13 times less risky than Korean Reinsurance. It trades about 0.06 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 797,000 in Korean Reinsurance Co on October 17, 2024 and sell it today you would earn a total of 11,000 from holding Korean Reinsurance Co or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngbo Chemical Co vs. Korean Reinsurance Co
Performance |
| Timeline |
| Youngbo Chemical |
| Korean Reinsurance |
Youngbo Chemical and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and Korean Reinsurance
The main advantage of trading using opposite Youngbo Chemical and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Youngbo Chemical vs. Hwangkum Steel Technology | Youngbo Chemical vs. Ilji Technology Co | Youngbo Chemical vs. Guyoung Technology Co | Youngbo Chemical vs. KMH Hitech Co |
| Korean Reinsurance vs. Youngbo Chemical Co | Korean Reinsurance vs. Hanwha Chemical Corp | Korean Reinsurance vs. Dongnam Chemical Co | Korean Reinsurance vs. ENERGYMACHINERY KOREA CoLtd |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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