Correlation Between Youngbo Chemical and Lake Materials
Can any of the company-specific risk be diversified away by investing in both Youngbo Chemical and Lake 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 Lake 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 Lake Materials Co, you can compare the effects of market volatilities on Youngbo Chemical and Lake 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 Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngbo Chemical and Lake Materials.
Diversification Opportunities for Youngbo Chemical and Lake Materials
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Youngbo and Lake is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials 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 Lake Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Materials has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and Lake Materials go up and down completely randomly.
Pair Corralation between Youngbo Chemical and Lake Materials
Assuming the 90 days trading horizon Youngbo Chemical Co is expected to generate 0.65 times more return on investment than Lake Materials. However, Youngbo Chemical Co is 1.54 times less risky than Lake Materials. It trades about 0.37 of its potential returns per unit of risk. Lake Materials Co is currently generating about -0.06 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngbo Chemical Co vs. Lake Materials Co
Performance |
| Timeline |
| Youngbo Chemical |
| Lake Materials |
Youngbo Chemical and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngbo Chemical and Lake Materials
The main advantage of trading using opposite Youngbo Chemical and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngbo Chemical position performs unexpectedly, Lake 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 Lake Materials will offset losses from the drop in Lake Materials' long position.| Youngbo Chemical vs. Seoul Food Industrial | Youngbo Chemical vs. SH Energy Chemical | Youngbo Chemical vs. Hyundai Green Food | Youngbo Chemical vs. Dongnam Chemical Co |
| Lake Materials vs. Ssangyong Information Communication | Lake Materials vs. Vissem Electronics Co | Lake Materials vs. KT Submarine Telecom | Lake Materials vs. Korea Electronic Certification |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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