Correlation Between Youl Chon and JETEMA

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

Diversification Opportunities for Youl Chon and JETEMA

0.06

Correlation Coefficient

Youl Chon  JETEMA

Significant diversification

The 3 months correlation between Youl and JETEMA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and JETEMA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JETEMA 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 JETEMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JETEMA has no effect on the direction of Youl Chon i.e., Youl Chon and JETEMA go up and down completely randomly.

Pair Corralation between Youl Chon and JETEMA

Assuming the 90 days trading horizon Youl Chon Chemical is expected to generate 1.89 times more return on investment than JETEMA. However, Youl Chon is 1.89 times more volatile than JETEMA Co. It trades about 0.59 of its potential returns per unit of risk. JETEMA Co is currently generating about -0.25 per unit of risk. If you would invest  2,080,000  in Youl Chon Chemical on October 26, 2024 and sell it today you would earn a total of  1,240,000  from holding Youl Chon Chemical or generate 59.62% 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.  JETEMA Co

Youl Chon Chemical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Youl Chon Chemical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youl Chon sustained solid returns over the last few months and may actually be approaching a breakup point.

JETEMA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JETEMA Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Youl Chon and JETEMA

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

The idea behind Youl Chon Chemical and JETEMA 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..