Correlation Between Youngchang Chemical and Kukdong Oil
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Kukdong Oil 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 Kukdong Oil 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 Kukdong Oil Chemicals, you can compare the effects of market volatilities on Youngchang Chemical and Kukdong Oil 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 Kukdong Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Kukdong Oil.
Diversification Opportunities for Youngchang Chemical and Kukdong Oil
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Youngchang and Kukdong is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Kukdong Oil Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdong Oil Chemicals 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 Kukdong Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdong Oil Chemicals has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Kukdong Oil go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Kukdong Oil
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 3.13 times more return on investment than Kukdong Oil. However, Youngchang Chemical is 3.13 times more volatile than Kukdong Oil Chemicals. It trades about 0.05 of its potential returns per unit of risk. Kukdong Oil Chemicals is currently generating about -0.03 per unit of risk. If you would invest 1,867,000 in Youngchang Chemical Co on October 26, 2024 and sell it today you would earn a total of 333,000 from holding Youngchang Chemical Co or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Kukdong Oil Chemicals
Performance |
| Timeline |
| Youngchang Chemical |
| Kukdong Oil Chemicals |
Youngchang Chemical and Kukdong Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Kukdong Oil
The main advantage of trading using opposite Youngchang Chemical and Kukdong Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Kukdong Oil 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 Kukdong Oil will offset losses from the drop in Kukdong Oil's long position.| Youngchang Chemical vs. Atinum Investment Co | Youngchang Chemical vs. PJ Metal Co | Youngchang Chemical vs. iNtRON Biotechnology | Youngchang Chemical vs. Daesung Industrial Co |
| Kukdong Oil vs. KB Financial Group | Kukdong Oil vs. Shinhan Financial Group | Kukdong Oil vs. Hana Financial | Kukdong Oil vs. Woori Financial Group |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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