Correlation Between Young Poong and Rainbow Robotics
Can any of the company-specific risk be diversified away by investing in both Young Poong and Rainbow Robotics 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 Young Poong and Rainbow Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Poong Precision and Rainbow Robotics, you can compare the effects of market volatilities on Young Poong and Rainbow Robotics 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 Young Poong with a short position of Rainbow Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Poong and Rainbow Robotics.
Diversification Opportunities for Young Poong and Rainbow Robotics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Young and Rainbow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Young Poong Precision and Rainbow Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Robotics and Young Poong 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 Young Poong Precision are associated (or correlated) with Rainbow Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Robotics has no effect on the direction of Young Poong i.e., Young Poong and Rainbow Robotics go up and down completely randomly.
Pair Corralation between Young Poong and Rainbow Robotics
Assuming the 90 days trading horizon Young Poong Precision is expected to under-perform the Rainbow Robotics. In addition to that, Young Poong is 1.1 times more volatile than Rainbow Robotics. It trades about -0.57 of its total potential returns per unit of risk. Rainbow Robotics is currently generating about 0.18 per unit of volatility. If you would invest 12,520,000 in Rainbow Robotics on August 29, 2024 and sell it today you would earn a total of 1,530,000 from holding Rainbow Robotics or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Poong Precision vs. Rainbow Robotics
Performance |
| Timeline |
| Young Poong Precision |
| Rainbow Robotics |
Young Poong and Rainbow Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Poong and Rainbow Robotics
The main advantage of trading using opposite Young Poong and Rainbow Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Poong position performs unexpectedly, Rainbow Robotics 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 Rainbow Robotics will offset losses from the drop in Rainbow Robotics' long position.The idea behind Young Poong Precision and Rainbow Robotics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Rainbow Robotics vs. Songwon Industrial Co | Rainbow Robotics vs. Green Cross Medical | Rainbow Robotics vs. Myoung Shin Industrial | Rainbow Robotics vs. Seoyon Topmetal 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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