Correlation Between Solution Advanced and YOUNGHWA TECH
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and YOUNGHWA TECH 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 Solution Advanced and YOUNGHWA TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and YOUNGHWA TECH Co, you can compare the effects of market volatilities on Solution Advanced and YOUNGHWA TECH 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 Solution Advanced with a short position of YOUNGHWA TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and YOUNGHWA TECH.
Diversification Opportunities for Solution Advanced and YOUNGHWA TECH
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and YOUNGHWA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and YOUNGHWA TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YOUNGHWA TECH and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with YOUNGHWA TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YOUNGHWA TECH has no effect on the direction of Solution Advanced i.e., Solution Advanced and YOUNGHWA TECH go up and down completely randomly.
Pair Corralation between Solution Advanced and YOUNGHWA TECH
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the YOUNGHWA TECH. In addition to that, Solution Advanced is 1.45 times more volatile than YOUNGHWA TECH Co. It trades about -0.06 of its total potential returns per unit of risk. YOUNGHWA TECH Co is currently generating about -0.06 per unit of volatility. If you would invest 1,030,971 in YOUNGHWA TECH Co on September 14, 2024 and sell it today you would lose (330,971) from holding YOUNGHWA TECH Co or give up 32.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Solution Advanced Technology vs. YOUNGHWA TECH Co
Performance |
| Timeline |
| Solution Advanced |
| YOUNGHWA TECH |
Solution Advanced and YOUNGHWA TECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and YOUNGHWA TECH
The main advantage of trading using opposite Solution Advanced and YOUNGHWA TECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, YOUNGHWA TECH 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 YOUNGHWA TECH will offset losses from the drop in YOUNGHWA TECH's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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