Correlation Between Namhae Chemical and Youngbo Chemical
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Youngbo Chemical 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 Namhae Chemical and Youngbo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Youngbo Chemical Co, you can compare the effects of market volatilities on Namhae Chemical and Youngbo Chemical 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 Namhae Chemical with a short position of Youngbo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Youngbo Chemical.
Diversification Opportunities for Namhae Chemical and Youngbo Chemical
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Namhae and Youngbo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Youngbo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngbo Chemical and Namhae 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 Namhae Chemical are associated (or correlated) with Youngbo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngbo Chemical has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Youngbo Chemical go up and down completely randomly.
Pair Corralation between Namhae Chemical and Youngbo Chemical
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 3.7 times less return on investment than Youngbo Chemical. But when comparing it to its historical volatility, Namhae Chemical is 2.89 times less risky than Youngbo Chemical. It trades about 0.26 of its potential returns per unit of risk. Youngbo Chemical Co is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 372,500 in Youngbo Chemical Co on November 4, 2024 and sell it today you would earn a total of 36,000 from holding Youngbo Chemical Co or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Youngbo Chemical Co
Performance |
| Timeline |
| Namhae Chemical |
| Youngbo Chemical |
Namhae Chemical and Youngbo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Youngbo Chemical
The main advantage of trading using opposite Namhae Chemical and Youngbo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Youngbo Chemical 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 Youngbo Chemical will offset losses from the drop in Youngbo Chemical's long position.| Namhae Chemical vs. INNOX Advanced Materials | Namhae Chemical vs. Lake Materials Co | Namhae Chemical vs. Neungyule Education | Namhae Chemical vs. Ssangyong Materials Corp |
| Youngbo Chemical vs. Seoul Food Industrial | Youngbo Chemical vs. SH Energy Chemical | Youngbo Chemical vs. Hyundai Green Food | Youngbo Chemical vs. Dongnam Chemical 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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