Correlation Between Youl Chon and Jeil Steel

Can any of the company-specific risk be diversified away by investing in both Youl Chon and Jeil Steel 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 Youl Chon and Jeil Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Youl Chon Chemical and Jeil Steel Mfg, you can compare the effects of market volatilities on Youl Chon and Jeil Steel 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 Youl Chon with a short position of Jeil Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youl Chon and Jeil Steel.

Diversification Opportunities for Youl Chon and Jeil Steel

0.19

Correlation Coefficient

Youl Chon  Jeil Steel

Average diversification

The 3 months correlation between Youl and Jeil is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Jeil Steel Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeil Steel Mfg and Youl Chon 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 Youl Chon Chemical are associated (or correlated) with Jeil Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeil Steel Mfg has no effect on the direction of Youl Chon i.e., Youl Chon and Jeil Steel go up and down completely randomly.

Pair Corralation between Youl Chon and Jeil Steel

Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 1.09 times more return on investment than Jeil Steel. However, Youl Chon is 1.09 times more volatile than Jeil Steel Mfg. It trades about 0.29 of its potential returns per unit of risk. Jeil Steel Mfg is currently generating about -0.07 per unit of risk. If you would invest  1,986,128  in Youl Chon Chemical on October 12, 2024 and sell it today you would earn a total of  348,872  from holding Youl Chon Chemical or generate 17.57% return on investment over 90 days.

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

Youl Chon Chemical  vs.  Jeil Steel Mfg

Youl Chon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Youl Chon Chemical 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.

Jeil Steel Mfg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Youl Chon and Jeil Steel

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

The idea behind Youl Chon Chemical and Jeil Steel Mfg 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.