Correlation Between KM and Youngbo Chemical
Can any of the company-specific risk be diversified away by investing in both KM 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 KM and Youngbo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KM Corporation and Youngbo Chemical Co, you can compare the effects of market volatilities on KM 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 KM with a short position of Youngbo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KM and Youngbo Chemical.
Diversification Opportunities for KM and Youngbo Chemical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KM and Youngbo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KM Corp. and Youngbo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngbo Chemical and KM 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 KM Corporation 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 KM i.e., KM and Youngbo Chemical go up and down completely randomly.
Pair Corralation between KM and Youngbo Chemical
Assuming the 90 days trading horizon KM Corporation is expected to under-perform the Youngbo Chemical. In addition to that, KM is 1.7 times more volatile than Youngbo Chemical Co. It trades about -0.05 of its total potential returns per unit of risk. Youngbo Chemical Co is currently generating about 0.01 per unit of volatility. If you would invest 342,150 in Youngbo Chemical Co on September 12, 2024 and sell it today you would earn a total of 14,350 from holding Youngbo Chemical Co or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KM Corp. vs. Youngbo Chemical Co
Performance |
| Timeline |
| KM Corporation |
| Youngbo Chemical |
KM and Youngbo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KM and Youngbo Chemical
The main advantage of trading using opposite KM and Youngbo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KM 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.The idea behind KM Corporation and Youngbo Chemical Co 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.| Youngbo Chemical vs. Samsung Electronics Co | Youngbo Chemical vs. Samsung Electronics Co | Youngbo Chemical vs. SK Hynix | Youngbo Chemical vs. POSCO Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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