Correlation Between Youl Chon and Jin Air

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

Diversification Opportunities for Youl Chon and Jin Air

0.38

Correlation Coefficient

Youl Chon  Jin Air

Weak diversification

The 3 months correlation between Youl and Jin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Youl Chon i.e., Youl Chon and Jin Air go up and down completely randomly.

Pair Corralation between Youl Chon and Jin Air

Assuming the 90 days trading horizon Youl Chon is expected to generate 2.89 times less return on investment than Jin Air. In addition to that, Youl Chon is 1.32 times more volatile than Jin Air Co. It trades about 0.02 of its total potential returns per unit of risk. Jin Air Co is currently generating about 0.09 per unit of volatility. If you would invest  1,046,000  in Jin Air Co on September 3, 2024 and sell it today you would earn a total of  132,000  from holding Jin Air Co or generate 12.62% return on investment over 90 days.

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

Youl Chon Chemical  vs.  Jin Air Co

Youl Chon Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Youl Chon Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Youl Chon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jin Air

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Youl Chon and Jin Air

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

The idea behind Youl Chon Chemical and Jin Air 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.