Correlation Between Youngbo Chemical and KM
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and KM 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 KM 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 KM Corporation, you can compare the effects of market volatilities on Youngbo Chemical and KM 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 KM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and KM.
Diversification Opportunities for Youngbo Chemical and KM
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Youngbo and KM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and KM Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KM Corporation 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 KM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KM Corporation has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and KM go up and down completely randomly.
Pair Corralation between Youngbo Chemical and KM
Assuming the 90 days trading horizon Youngbo Chemical is expected to generate 2.19 times less return on investment than KM. But when comparing it to its historical volatility, Youngbo Chemical Co is 4.17 times less risky than KM. It trades about 0.3 of its potential returns per unit of risk. KM Corporation is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 294,762 in KM Corporation on October 22, 2024 and sell it today you would earn a total of 30,238 from holding KM Corporation or generate 10.26% 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. KM Corp.
Performance |
| Timeline |
| Youngbo Chemical |
| KM Corporation |
Youngbo Chemical and KM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and KM
The main advantage of trading using opposite Youngbo Chemical and KM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, KM 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 KM will offset losses from the drop in KM's long position.| Youngbo Chemical vs. Tuksu Engineering ConstructionLtd | Youngbo Chemical vs. Keyang Electric Machinery | Youngbo Chemical vs. Dongwoo Farm To | Youngbo Chemical vs. Camus Engineering Construction |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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