Correlation Between Youngchang Chemical and Hyosung Chemical
Can any of the company-specific risk be diversified away by investing in both Youngchang Chemical and Hyosung 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 Hyosung 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 Hyosung Chemical Corp, you can compare the effects of market volatilities on Youngchang Chemical and Hyosung 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 Hyosung Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and Hyosung Chemical.
Diversification Opportunities for Youngchang Chemical and Hyosung Chemical
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Youngchang and Hyosung is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and Hyosung Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Chemical Corp 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 Hyosung Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Chemical Corp has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and Hyosung Chemical go up and down completely randomly.
Pair Corralation between Youngchang Chemical and Hyosung Chemical
Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 1.28 times more return on investment than Hyosung Chemical. However, Youngchang Chemical is 1.28 times more volatile than Hyosung Chemical Corp. It trades about -0.26 of its potential returns per unit of risk. Hyosung Chemical Corp is currently generating about -0.5 per unit of risk. If you would invest 1,707,000 in Youngchang Chemical Co on August 29, 2024 and sell it today you would lose (303,000) from holding Youngchang Chemical Co or give up 17.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Youngchang Chemical Co vs. Hyosung Chemical Corp
Performance |
| Timeline |
| Youngchang Chemical |
| Hyosung Chemical Corp |
Youngchang Chemical and Hyosung Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Youngchang Chemical and Hyosung Chemical
The main advantage of trading using opposite Youngchang Chemical and Hyosung Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngchang Chemical position performs unexpectedly, Hyosung 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 Hyosung Chemical will offset losses from the drop in Hyosung Chemical's long position.| Youngchang Chemical vs. Dongbu Steel Co | Youngchang Chemical vs. J Steel Co | Youngchang Chemical vs. Ni Steel | Youngchang Chemical vs. Sungchang Autotech Co |
| Hyosung Chemical vs. Nh Investment And | Hyosung Chemical vs. Seoyon Topmetal Co | Hyosung Chemical vs. Sangsangin Investment Securities | Hyosung Chemical vs. MetaLabs 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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