Correlation Between Youngchang Chemical and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Hotel Shilla 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 Hotel Shilla 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 Hotel Shilla Co, you can compare the effects of market volatilities on Youngchang Chemical and Hotel Shilla 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 Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Hotel Shilla.
Diversification Opportunities for Youngchang Chemical and Hotel Shilla
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Youngchang and Hotel is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Hotel Shilla go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Hotel Shilla
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 8.95 times more return on investment than Hotel Shilla. However, Youngchang Chemical is 8.95 times more volatile than Hotel Shilla Co. It trades about 0.54 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.14 per unit of risk. If you would invest 1,322,000 in Youngchang Chemical Co on October 25, 2024 and sell it today you would earn a total of 943,000 from holding Youngchang Chemical Co or generate 71.33% 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. Hotel Shilla Co
Performance |
| Timeline |
| Youngchang Chemical |
| Hotel Shilla |
Youngchang Chemical and Hotel Shilla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Hotel Shilla
The main advantage of trading using opposite Youngchang Chemical and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.| Youngchang Chemical vs. SK Chemicals Co | Youngchang Chemical vs. Eugene Technology CoLtd | Youngchang Chemical vs. Seoam Machinery Industry | Youngchang Chemical vs. Bosung Power Technology |
| Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. Samsung Electronics Co | Hotel Shilla vs. LG Energy Solution | Hotel Shilla vs. SK Hynix |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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