Correlation Between Youngchang Chemical and Daewon Chemical
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Daewon 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 Youngchang Chemical and Daewon Chemical 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 Daewon Chemical Co, you can compare the effects of market volatilities on Youngchang Chemical and Daewon 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 Youngchang Chemical with a short position of Daewon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Daewon Chemical.
Diversification Opportunities for Youngchang Chemical and Daewon Chemical
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Youngchang and Daewon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Daewon Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon 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 Daewon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Chemical has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Daewon Chemical go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Daewon Chemical
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 1.28 times more return on investment than Daewon Chemical. However, Youngchang Chemical is 1.28 times more volatile than Daewon Chemical Co. It trades about 0.05 of its potential returns per unit of risk. Daewon Chemical Co is currently generating about -0.06 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Daewon Chemical Co
Performance |
| Timeline |
| Youngchang Chemical |
| Daewon Chemical |
Youngchang Chemical and Daewon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Daewon Chemical
The main advantage of trading using opposite Youngchang Chemical and Daewon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Daewon 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 Daewon Chemical will offset losses from the drop in Daewon Chemical'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 |
| Daewon Chemical vs. SAMG Entertainment Co | Daewon Chemical vs. Daewon Media Co | Daewon Chemical vs. MEDIANA CoLtd | Daewon Chemical vs. Playgram 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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