Correlation Between Youngbo Chemical and Vitzro Tech

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

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

Diversification Opportunities for Youngbo Chemical and Vitzro Tech

0.38

Correlation Coefficient

Youngbo Chemical  Vitzro Tech

Weak diversification

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

Pair Corralation between Youngbo Chemical and Vitzro Tech

Assuming the 90 days trading horizon Youngbo Chemical is expected to generate 1.15 times less return on investment than Vitzro Tech. But when comparing it to its historical volatility, Youngbo Chemical Co is 2.08 times less risky than Vitzro Tech. It trades about 0.21 of its potential returns per unit of risk. Vitzro Tech Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  676,956  in Vitzro Tech Co on October 25, 2024 and sell it today you would earn a total of  123,044  from holding Vitzro Tech Co or generate 18.18% return on investment over 90 days.

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

Youngbo Chemical Co  vs.  Vitzro Tech Co

Youngbo Chemical

Risk-Adjusted Performance

16 of 100

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.

Vitzro Tech

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vitzro Tech Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vitzro Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youngbo Chemical and Vitzro Tech

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

The idea behind Youngbo Chemical Co and Vitzro Tech 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.