Correlation Between Kyung Chang and Youngsin Metal

Can any of the company-specific risk be diversified away by investing in both Kyung Chang and Youngsin 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 Kyung Chang and Youngsin Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kyung Chang Industrial and Youngsin Metal Industrial, you can compare the effects of market volatilities on Kyung Chang and Youngsin 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 Kyung Chang with a short position of Youngsin Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyung Chang and Youngsin Metal.

Diversification Opportunities for Kyung Chang and Youngsin Metal

0.8

Correlation Coefficient

Kyung Chang  Youngsin Metal

Very poor diversification

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

Pair Corralation between Kyung Chang and Youngsin Metal

Assuming the 90 days trading horizon Kyung Chang is expected to generate 1.5 times less return on investment than Youngsin Metal. But when comparing it to its historical volatility, Kyung Chang Industrial is 1.9 times less risky than Youngsin Metal. It trades about 0.32 of its potential returns per unit of risk. Youngsin Metal Industrial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  197,700  in Youngsin Metal Industrial on October 9, 2024 and sell it today you would earn a total of  37,800  from holding Youngsin Metal Industrial or generate 19.12% return on investment over 90 days.

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

Kyung Chang Industrial  vs.  Youngsin Metal Industrial

Kyung Chang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyung Chang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Youngsin Metal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Youngsin Metal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kyung Chang and Youngsin Metal

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

The idea behind Kyung Chang Industrial and Youngsin Metal Industrial 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.