Correlation Between Microfriend and Youngbo Chemical
Can any of the company-specific risk be diversified away by investing in both Microfriend and Youngbo 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 Microfriend and Youngbo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Youngbo Chemical Co, you can compare the effects of market volatilities on Microfriend and Youngbo 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 Microfriend with a short position of Youngbo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Youngbo Chemical.
Diversification Opportunities for Microfriend and Youngbo Chemical
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Microfriend and Youngbo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Youngbo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngbo Chemical and Microfriend 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 Microfriend are associated (or correlated) with Youngbo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youngbo Chemical has no effect on the direction of Microfriend i.e., Microfriend and Youngbo Chemical go up and down completely randomly.
Pair Corralation between Microfriend and Youngbo Chemical
Assuming the 90 days trading horizon Microfriend is expected to under-perform the Youngbo Chemical. In addition to that, Microfriend is 1.47 times more volatile than Youngbo Chemical Co. It trades about -0.18 of its total potential returns per unit of risk. Youngbo Chemical Co is currently generating about 0.41 per unit of volatility. If you would invest 362,500 in Youngbo Chemical Co on November 3, 2024 and sell it today you would earn a total of 46,000 from holding Youngbo Chemical Co or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Youngbo Chemical Co
Performance |
| Timeline |
| Microfriend |
| Youngbo Chemical |
Microfriend and Youngbo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Youngbo Chemical
The main advantage of trading using opposite Microfriend and Youngbo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Youngbo 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 Youngbo Chemical will offset losses from the drop in Youngbo Chemical's long position.| Microfriend vs. Next Entertainment World | Microfriend vs. Tamul Multimedia Co | Microfriend vs. T3 Entertainment Co | Microfriend vs. Automobile Pc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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