Correlation Between Youngbo Chemical and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and LG Chemicals 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 LG Chemicals 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 LG Chemicals, you can compare the effects of market volatilities on Youngbo Chemical and LG Chemicals 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 LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and LG Chemicals.
Diversification Opportunities for Youngbo Chemical and LG Chemicals
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Youngbo and 051910 is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and LG Chemicals go up and down completely randomly.
Pair Corralation between Youngbo Chemical and LG Chemicals
Assuming the 90 days trading horizon Youngbo Chemical Co is expected to generate 0.51 times more return on investment than LG Chemicals. However, Youngbo Chemical Co is 1.97 times less risky than LG Chemicals. It trades about 0.22 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.18 per unit of risk. If you would invest 344,126 in Youngbo Chemical Co on October 25, 2024 and sell it today you would earn a total of 45,374 from holding Youngbo Chemical Co or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngbo Chemical Co vs. LG Chemicals
Performance |
| Timeline |
| Youngbo Chemical |
| LG Chemicals |
Youngbo Chemical and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and LG Chemicals
The main advantage of trading using opposite Youngbo Chemical and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, LG Chemicals 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 LG Chemicals will offset losses from the drop in LG Chemicals' long position.| Youngbo Chemical vs. Dongnam Chemical Co | Youngbo Chemical vs. Automobile Pc | Youngbo Chemical vs. INFINITT Healthcare Co | Youngbo Chemical vs. Infinitt Healthcare Co |
| LG Chemicals vs. Formetal Co | LG Chemicals vs. Jin Air Co | LG Chemicals vs. Kbi Metal Co | LG Chemicals vs. SK Telecom 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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