Correlation Between Youngchang Chemical and SH Energy
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and SH Energy 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 Youngchang Chemical and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Youngchang Chemical Co and SH Energy Chemical, you can compare the effects of market volatilities on Youngchang Chemical and SH Energy 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 Youngchang Chemical with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and SH Energy.
Diversification Opportunities for Youngchang Chemical and SH Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Youngchang and 002360 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Youngchang 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 Youngchang Chemical Co are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and SH Energy go up and down completely randomly.
Pair Corralation between Youngchang Chemical and SH Energy
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to under-perform the SH Energy. But the stock apears to be less risky and, when comparing its historical volatility, Youngchang Chemical Co is 1.09 times less risky than SH Energy. The stock trades about -0.25 of its potential returns per unit of risk. The SH Energy Chemical is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 50,600 in SH Energy Chemical on August 30, 2024 and sell it today you would earn a total of 5,200 from holding SH Energy Chemical or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. SH Energy Chemical
Performance |
| Timeline |
| Youngchang Chemical |
| SH Energy Chemical |
Youngchang Chemical and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and SH Energy
The main advantage of trading using opposite Youngchang Chemical and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.The idea behind Youngchang Chemical Co and SH Energy Chemical 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.| SH Energy vs. AptaBio Therapeutics | SH Energy vs. Daewoo SBI SPAC | SH Energy vs. Dream Security co | SH Energy vs. Microfriend |
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 Stocks Directory module to find actively traded stocks across global markets.
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