Correlation Between Youngbo Chemical and Digital Power
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on Youngbo Chemical and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and Digital Power.
Diversification Opportunities for Youngbo Chemical and Digital Power
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Youngbo and Digital is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and Digital Power go up and down completely randomly.
Pair Corralation between Youngbo Chemical and Digital Power
Assuming the 90 days trading horizon Youngbo Chemical is expected to generate 3.14 times less return on investment than Digital Power. But when comparing it to its historical volatility, Youngbo Chemical Co is 1.54 times less risky than Digital Power. It trades about 0.02 of its potential returns per unit of risk. Digital Power Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 571,089 in Digital Power Communications on October 28, 2024 and sell it today you would earn a total of 246,911 from holding Digital Power Communications or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngbo Chemical Co vs. Digital Power Communications
Performance |
| Timeline |
| Youngbo Chemical |
| Digital Power Commun |
Youngbo Chemical and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and Digital Power
The main advantage of trading using opposite Youngbo Chemical and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, Digital Power 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 Power will offset losses from the drop in Digital Power's long position.| Youngbo Chemical vs. KB Financial Group | Youngbo Chemical vs. Shinhan Financial Group | Youngbo Chemical vs. Hana Financial | Youngbo Chemical vs. Woori Financial Group |
| Digital Power vs. KB Financial Group | Digital Power vs. Shinhan Financial Group | Digital Power vs. Hana Financial | Digital Power vs. Woori Financial Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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