Correlation Between Youngbo Chemical and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and Ssangyong Materials 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 Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Youngbo Chemical and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and Ssangyong Materials.
Diversification Opportunities for Youngbo Chemical and Ssangyong Materials
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Youngbo and Ssangyong is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Youngbo Chemical and Ssangyong Materials
Assuming the 90 days trading horizon Youngbo Chemical Co is expected to generate 0.41 times more return on investment than Ssangyong Materials. However, Youngbo Chemical Co is 2.41 times less risky than Ssangyong Materials. It trades about 0.21 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about -0.01 per unit of risk. If you would invest 334,265 in Youngbo Chemical Co on October 30, 2024 and sell it today you would earn a total of 58,735 from holding Youngbo Chemical Co or generate 17.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngbo Chemical Co vs. Ssangyong Materials Corp
Performance |
| Timeline |
| Youngbo Chemical |
| Ssangyong Materials Corp |
Youngbo Chemical and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and Ssangyong Materials
The main advantage of trading using opposite Youngbo Chemical and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' 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 |
| Ssangyong Materials vs. KB Financial Group | Ssangyong Materials vs. Shinhan Financial Group | Ssangyong Materials vs. Hana Financial | Ssangyong Materials 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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