Correlation Between Young Cos and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Young Cos and Westlake 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 Young Cos and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and Westlake Chemical Corp, you can compare the effects of market volatilities on Young Cos and Westlake 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 Young Cos with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Westlake Chemical.
Diversification Opportunities for Young Cos and Westlake Chemical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Young and Westlake is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Young Cos 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 Young Cos Brewery are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Young Cos i.e., Young Cos and Westlake Chemical go up and down completely randomly.
Pair Corralation between Young Cos and Westlake Chemical
Assuming the 90 days trading horizon Young Cos Brewery is expected to under-perform the Westlake Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Young Cos Brewery is 1.15 times less risky than Westlake Chemical. The stock trades about -0.03 of its potential returns per unit of risk. The Westlake Chemical Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,263 in Westlake Chemical Corp on August 26, 2024 and sell it today you would lose (206.00) from holding Westlake Chemical Corp or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.91% |
| Values | Daily Returns |
Young Cos Brewery vs. Westlake Chemical Corp
Performance |
| Timeline |
| Young Cos Brewery |
| Westlake Chemical Corp |
Young Cos and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Westlake Chemical
The main advantage of trading using opposite Young Cos and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Westlake 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Toyota Motor Corp | Young Cos vs. Hon Hai Precision |
| Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Hyundai Motor | Westlake Chemical vs. Toyota Motor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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