Correlation Between Formetal and Youngchang Chemical
Can any of the company-specific risk be diversified away by investing in both Formetal and Youngchang 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 Formetal and Youngchang Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Youngchang Chemical Co, you can compare the effects of market volatilities on Formetal and Youngchang 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 Formetal with a short position of Youngchang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Youngchang Chemical.
Diversification Opportunities for Formetal and Youngchang Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formetal and Youngchang is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Youngchang Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngchang Chemical and Formetal 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 Formetal Co are associated (or correlated) with Youngchang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngchang Chemical has no effect on the direction of Formetal i.e., Formetal and Youngchang Chemical go up and down completely randomly.
Pair Corralation between Formetal and Youngchang Chemical
Assuming the 90 days trading horizon Formetal is expected to generate 4.78 times less return on investment than Youngchang Chemical. But when comparing it to its historical volatility, Formetal Co is 2.28 times less risky than Youngchang Chemical. It trades about 0.04 of its potential returns per unit of risk. Youngchang Chemical Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 960,371 in Youngchang Chemical Co on November 5, 2024 and sell it today you would earn a total of 1,154,629 from holding Youngchang Chemical Co or generate 120.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Youngchang Chemical Co
Performance |
| Timeline |
| Formetal |
| Youngchang Chemical |
Formetal and Youngchang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Youngchang Chemical
The main advantage of trading using opposite Formetal and Youngchang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Youngchang 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 Youngchang Chemical will offset losses from the drop in Youngchang Chemical's long position.| Formetal vs. Korea Electronic Certification | Formetal vs. Samyang Foods Co | Formetal vs. Cuckoo Electronics Co | Formetal vs. Vissem Electronics Co |
| Youngchang Chemical vs. LG Chem | Youngchang Chemical vs. Chunbo Co | Youngchang Chemical vs. DukSan Neolux CoLtd | Youngchang Chemical vs. Hyosung Chemical Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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