Correlation Between Youngbo Chemical and CG Hi

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

Diversification Opportunities for Youngbo Chemical and CG Hi

0.8

Correlation Coefficient

Youngbo Chemical  CG Hi

Very poor diversification

The 3 months correlation between Youngbo and 264660 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Youngbo Chemical Co and CG Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CG Hi 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 CG Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CG Hi Tech has no effect on the direction of Youngbo Chemical i.e., Youngbo Chemical and CG Hi go up and down completely randomly.

Pair Corralation between Youngbo Chemical and CG Hi

Assuming the 90 days trading horizon Youngbo Chemical is expected to generate 1.93 times less return on investment than CG Hi. But when comparing it to its historical volatility, Youngbo Chemical Co is 2.63 times less risky than CG Hi. It trades about 0.21 of its potential returns per unit of risk. CG Hi Tech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  951,386  in CG Hi Tech on December 25, 2024 and sell it today you would earn a total of  424,614  from holding CG Hi Tech or generate 44.63% return on investment over 90 days.

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

Youngbo Chemical Co  vs.  CG Hi Tech

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 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.

CG Hi Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CG Hi Tech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CG Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youngbo Chemical and CG Hi

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

The idea behind Youngbo Chemical Co and CG Hi Tech 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.