Correlation Between Youngsin Metal and Drb Industrial

Can any of the company-specific risk be diversified away by investing in both Youngsin Metal and Drb Industrial 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 Drb Industrial 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 Drb Industrial, you can compare the effects of market volatilities on Youngsin Metal and Drb Industrial 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 Drb Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngsin Metal and Drb Industrial.

Diversification Opportunities for Youngsin Metal and Drb Industrial

0.53

Correlation Coefficient

Youngsin Metal  Drb Industrial

Very weak diversification

The 3 months correlation between Youngsin and Drb is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Youngsin Metal Industrial and Drb Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drb Industrial 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 Drb Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drb Industrial has no effect on the direction of Youngsin Metal i.e., Youngsin Metal and Drb Industrial go up and down completely randomly.

Pair Corralation between Youngsin Metal and Drb Industrial

Assuming the 90 days trading horizon Youngsin Metal Industrial is expected to generate 1.36 times more return on investment than Drb Industrial. However, Youngsin Metal is 1.36 times more volatile than Drb Industrial. It trades about -0.06 of its potential returns per unit of risk. Drb Industrial is currently generating about -0.09 per unit of risk. If you would invest  267,000  in Youngsin Metal Industrial on October 9, 2024 and sell it today you would lose (31,500) from holding Youngsin Metal Industrial or give up 11.8% of portfolio value over 90 days.

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

Youngsin Metal Industrial  vs.  Drb Industrial

Youngsin Metal Industrial

Risk-Adjusted Performance

0 of 100

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.

Drb Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drb Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Drb Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Youngsin Metal and Drb Industrial

The main advantage of trading using opposite Youngsin Metal and Drb Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Youngsin Metal position performs unexpectedly, Drb Industrial 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 Drb Industrial will offset losses from the drop in Drb Industrial's long position.

The idea behind Youngsin Metal Industrial and Drb Industrial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..