Correlation Between Youngchang Chemical and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on Youngchang Chemical and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Namhae Chemical.
Diversification Opportunities for Youngchang Chemical and Namhae Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Youngchang and Namhae is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Namhae Chemical go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Namhae Chemical
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 4.0 times more return on investment than Namhae Chemical. However, Youngchang Chemical is 4.0 times more volatile than Namhae Chemical. It trades about 0.05 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.03 per unit of risk. If you would invest 1,248,780 in Youngchang Chemical Co on January 27, 2025 and sell it today you would earn a total of 1,001,220 from holding Youngchang Chemical Co or generate 80.18% 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. Namhae Chemical
Performance |
| Timeline |
| Youngchang Chemical |
| Namhae Chemical |
Youngchang Chemical and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Namhae Chemical
The main advantage of trading using opposite Youngchang Chemical and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Youngchang Chemical vs. Daol Investment Securities | Youngchang Chemical vs. INFINITT Healthcare Co | Youngchang Chemical vs. Golden Bridge Investment | Youngchang Chemical vs. InnoTherapy |
| Namhae Chemical vs. DB Financial Investment | Namhae Chemical vs. Golden Bridge Investment | Namhae Chemical vs. Samyung Trading Co | Namhae Chemical vs. Eugene Investment Securities |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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