Correlation Between Namhae Chemical and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical and Youngchang 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 Youngchang 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 Youngchang Chemical Co, you can compare the effects of market volatilities on Namhae Chemical and Youngchang 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 Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Youngchang Chemical.
Diversification Opportunities for Namhae Chemical and Youngchang Chemical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Namhae and Youngchang is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang 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 Youngchang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngchang Chemical has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Namhae Chemical and Youngchang Chemical
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.35 times more return on investment than Youngchang Chemical. However, Namhae Chemical is 2.85 times less risky than Youngchang Chemical. It trades about -0.13 of its potential returns per unit of risk. Youngchang Chemical Co is currently generating about -0.3 per unit of risk. If you would invest 646,000 in Namhae Chemical on August 25, 2024 and sell it today you would lose (20,000) from holding Namhae Chemical or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. Youngchang Chemical Co
Performance |
| Timeline |
| Namhae Chemical |
| Youngchang Chemical |
Namhae Chemical and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Youngchang Chemical
The main advantage of trading using opposite Namhae Chemical and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical position performs unexpectedly, Youngchang 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 Youngchang Chemical will offset losses from the drop in Youngchang Chemical's long position.| Namhae Chemical vs. LG Chemicals | Namhae Chemical vs. Lotte Chemical Corp | Namhae Chemical vs. Hyundai Steel | Namhae Chemical vs. Dongkuk Steel Mill |
| Youngchang Chemical vs. Automobile Pc | Youngchang Chemical vs. Yura Tech Co | Youngchang Chemical vs. Eagle Veterinary Technology | Youngchang Chemical vs. RFTech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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