Correlation Between Youngchang Chemical and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Youngchang Chemical and Cheryong Industrial 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 Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Cheryong Industrial.
Diversification Opportunities for Youngchang Chemical and Cheryong Industrial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Youngchang and Cheryong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd 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 Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Cheryong Industrial
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 0.8 times more return on investment than Cheryong Industrial. However, Youngchang Chemical Co is 1.26 times less risky than Cheryong Industrial. It trades about 0.51 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about 0.2 per unit of risk. If you would invest 1,308,000 in Youngchang Chemical Co on October 26, 2024 and sell it today you would earn a total of 892,000 from holding Youngchang Chemical Co or generate 68.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Youngchang Chemical |
| Cheryong Industrial CoLtd |
Youngchang Chemical and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Cheryong Industrial
The main advantage of trading using opposite Youngchang Chemical and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial'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 |
| Cheryong Industrial vs. Sung Bo Chemicals | Cheryong Industrial vs. Youngchang Chemical Co | Cheryong Industrial vs. Playgram Co | Cheryong Industrial vs. SH Energy 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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