Correlation Between Youngchang Chemical and Korea Information
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Korea Information 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 Korea Information 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 Korea Information Communications, you can compare the effects of market volatilities on Youngchang Chemical and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Korea Information.
Diversification Opportunities for Youngchang Chemical and Korea Information
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Youngchang and Korea is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Korea Information go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Korea Information
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 6.04 times more return on investment than Korea Information. However, Youngchang Chemical is 6.04 times more volatile than Korea Information Communications. It trades about 0.39 of its potential returns per unit of risk. Korea Information Communications is currently generating about 0.19 per unit of risk. If you would invest 1,310,000 in Youngchang Chemical Co on October 17, 2024 and sell it today you would earn a total of 640,000 from holding Youngchang Chemical Co or generate 48.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Korea Information Communicatio
Performance |
| Timeline |
| Youngchang Chemical |
| Korea Information |
Youngchang Chemical and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Korea Information
The main advantage of trading using opposite Youngchang Chemical and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Youngchang Chemical vs. Woorim Machinery Co | Youngchang Chemical vs. Narae Nanotech Corp | Youngchang Chemical vs. A Tech Solution Co | Youngchang Chemical vs. Shinsegae Engineering Construction |
| Korea Information vs. JC Chemical Co | Korea Information vs. Youl Chon Chemical | Korea Information vs. Youngchang Chemical Co | Korea Information vs. Korea Petro Chemical |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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