Correlation Between Youngbo Chemical and Kukil Metal

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

Diversification Opportunities for Youngbo Chemical and Kukil Metal

0.48

Correlation Coefficient

Youngbo Chemical  Kukil Metal

Very weak diversification

The 3 months correlation between Youngbo and Kukil is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal 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 Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and Kukil Metal go up and down completely randomly.

Pair Corralation between Youngbo Chemical and Kukil Metal

Assuming the 90 days trading horizon Youngbo Chemical Co is expected to generate 1.16 times more return on investment than Kukil Metal. However, Youngbo Chemical is 1.16 times more volatile than Kukil Metal Co. It trades about 0.28 of its potential returns per unit of risk. Kukil Metal Co is currently generating about 0.05 per unit of risk. If you would invest  342,154  in Youngbo Chemical Co on December 4, 2024 and sell it today you would earn a total of  116,346  from holding Youngbo Chemical Co or generate 34.0% return on investment over 90 days.

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

Youngbo Chemical Co  vs.  Kukil Metal Co

Youngbo Chemical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Youngbo Chemical Co are ranked lower than 21 (%) 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.

Kukil Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kukil Metal Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kukil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Youngbo Chemical and Kukil Metal

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

The idea behind Youngbo Chemical Co and Kukil Metal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.