Correlation Between Youngsin Metal and Youngbo Chemical

Can any of the company-specific risk be diversified away by investing in both Youngsin Metal 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 Youngsin Metal and Youngbo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Youngsin Metal Industrial and Youngbo Chemical Co, you can compare the effects of market volatilities on Youngsin Metal 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 Youngsin Metal with a short position of Youngbo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngsin Metal and Youngbo Chemical.

Diversification Opportunities for Youngsin Metal and Youngbo Chemical

-0.58

Correlation Coefficient

Youngsin Metal  Youngbo Chemical

Excellent diversification

The 3 months correlation between Youngsin and Youngbo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Youngsin Metal Industrial and Youngbo Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youngbo Chemical and Youngsin Metal 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 Youngsin Metal Industrial 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 Youngsin Metal i.e., Youngsin Metal and Youngbo Chemical go up and down completely randomly.

Pair Corralation between Youngsin Metal and Youngbo Chemical

Assuming the 90 days trading horizon Youngsin Metal Industrial is expected to under-perform the Youngbo Chemical. In addition to that, Youngsin Metal is 1.27 times more volatile than Youngbo Chemical Co. It trades about -0.05 of its total potential returns per unit of risk. Youngbo Chemical Co is currently generating about 0.21 per unit of volatility. If you would invest  353,000  in Youngbo Chemical Co on December 25, 2024 and sell it today you would earn a total of  85,000  from holding Youngbo Chemical Co or generate 24.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Youngsin Metal Industrial  vs.  Youngbo Chemical Co

Youngsin Metal Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Youngsin Metal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Youngbo Chemical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Youngbo Chemical Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youngbo Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youngsin Metal and Youngbo Chemical

The main advantage of trading using opposite Youngsin Metal and Youngbo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngsin Metal 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.

The idea behind Youngsin Metal Industrial and Youngbo Chemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.