Correlation Between Youngchang Chemical and Hancom

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Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Hancom 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 Hancom 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 Hancom Inc, you can compare the effects of market volatilities on Youngchang Chemical and Hancom 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 Hancom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Hancom.

Diversification Opportunities for Youngchang Chemical and Hancom

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Youngchang and Hancom is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Hancom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancom Inc 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 Hancom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancom Inc has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Hancom go up and down completely randomly.

Pair Corralation between Youngchang Chemical and Hancom

Assuming the 90 days trading horizon Youngchang Chemical Co is expected to under-perform the Hancom. But the stock apears to be less risky and, when comparing its historical volatility, Youngchang Chemical Co is 1.75 times less risky than Hancom. The stock trades about -0.32 of its potential returns per unit of risk. The Hancom Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,914,000  in Hancom Inc on September 6, 2024 and sell it today you would earn a total of  311,000  from holding Hancom Inc or generate 16.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Youngchang Chemical Co  vs.  Hancom Inc

 Performance 
       Timeline  
Youngchang Chemical 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Youngchang Chemical Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Youngchang Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Hancom Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hancom Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hancom sustained solid returns over the last few months and may actually be approaching a breakup point.

Youngchang Chemical and Hancom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Youngchang Chemical and Hancom

The main advantage of trading using opposite Youngchang Chemical and Hancom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Hancom 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 Hancom will offset losses from the drop in Hancom's long position.
The idea behind Youngchang Chemical Co and Hancom Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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