Correlation Between Youngbo Chemical and KPX Green
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and KPX Green 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 KPX Green 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 KPX Green Chemical, you can compare the effects of market volatilities on Youngbo Chemical and KPX Green 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 KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and KPX Green.
Diversification Opportunities for Youngbo Chemical and KPX Green
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Youngbo and KPX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and KPX Green go up and down completely randomly.
Pair Corralation between Youngbo Chemical and KPX Green
Assuming the 90 days trading horizon Youngbo Chemical Co is expected to generate 0.36 times more return on investment than KPX Green. However, Youngbo Chemical Co is 2.77 times less risky than KPX Green. It trades about 0.37 of its potential returns per unit of risk. KPX Green Chemical is currently generating about -0.13 per unit of risk. If you would invest 370,000 in Youngbo Chemical Co on November 5, 2024 and sell it today you would earn a total of 38,500 from holding Youngbo Chemical Co or generate 10.41% 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. KPX Green Chemical
Performance |
| Timeline |
| Youngbo Chemical |
| KPX Green Chemical |
Youngbo Chemical and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and KPX Green
The main advantage of trading using opposite Youngbo Chemical and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| Youngbo Chemical vs. NH Investment Securities | Youngbo Chemical vs. KTB Investment Securities | Youngbo Chemical vs. Jeju Beer Co | Youngbo Chemical vs. Daol Investment Securities |
| KPX Green vs. Koryo Credit Information | KPX Green vs. System and Application | KPX Green vs. Woori Financial Group | KPX Green vs. Korea Information Engineering |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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