Correlation Between Daol Investment and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Daol Investment 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 Daol Investment and Youngchang Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daol Investment Securities and Youngchang Chemical Co, you can compare the effects of market volatilities on Daol Investment 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 Daol Investment with a short position of Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daol Investment and Youngchang Chemical.
Diversification Opportunities for Daol Investment and Youngchang Chemical
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daol and Youngchang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang Chemical and Daol Investment 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 Daol Investment Securities 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 Daol Investment i.e., Daol Investment and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Daol Investment and Youngchang Chemical
Assuming the 90 days trading horizon Daol Investment Securities is expected to generate 0.63 times more return on investment than Youngchang Chemical. However, Daol Investment Securities is 1.6 times less risky than Youngchang Chemical. It trades about 0.41 of its potential returns per unit of risk. Youngchang Chemical Co is currently generating about -0.02 per unit of risk. If you would invest 264,000 in Daol Investment Securities on September 28, 2024 and sell it today you would earn a total of 67,000 from holding Daol Investment Securities or generate 25.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daol Investment Securities vs. Youngchang Chemical Co
Performance |
| Timeline |
| Daol Investment Secu |
| Youngchang Chemical |
Daol Investment and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daol Investment and Youngchang Chemical
The main advantage of trading using opposite Daol Investment and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daol Investment 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.| Daol Investment vs. Nice Information Telecommunication | Daol Investment vs. Daesung Hi Tech Co | Daol Investment vs. Sangsin Energy Display | Daol Investment vs. Digital Power Communications |
| Youngchang Chemical vs. LG Chem | Youngchang Chemical vs. Chunbo Co | Youngchang Chemical vs. DukSan Neolux CoLtd | Youngchang Chemical vs. Hyosung Chemical Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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