Correlation Between KTB Investment and Youl Chon

Can any of the company-specific risk be diversified away by investing in both KTB Investment and Youl Chon 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 KTB Investment and Youl Chon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KTB Investment Securities and Youl Chon Chemical, you can compare the effects of market volatilities on KTB Investment and Youl Chon 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 KTB Investment with a short position of Youl Chon. Check out your portfolio center. Please also check ongoing floating volatility patterns of KTB Investment and Youl Chon.

Diversification Opportunities for KTB Investment and Youl Chon

0.07

Correlation Coefficient

KTB Investment  Youl Chon

Significant diversification

The 3 months correlation between KTB and Youl is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding KTB Investment Securities and Youl Chon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Youl Chon Chemical and KTB Investment 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 KTB Investment Securities are associated (or correlated) with Youl Chon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Youl Chon Chemical has no effect on the direction of KTB Investment i.e., KTB Investment and Youl Chon go up and down completely randomly.

Pair Corralation between KTB Investment and Youl Chon

Assuming the 90 days trading horizon KTB Investment Securities is expected to under-perform the Youl Chon. In addition to that, KTB Investment is 1.04 times more volatile than Youl Chon Chemical. It trades about -0.11 of its total potential returns per unit of risk. Youl Chon Chemical is currently generating about 0.54 per unit of volatility. If you would invest  2,080,000  in Youl Chon Chemical on October 26, 2024 and sell it today you would earn a total of  1,180,000  from holding Youl Chon Chemical or generate 56.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

KTB Investment Securities  vs.  Youl Chon Chemical

KTB Investment Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KTB Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KTB Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Youl Chon Chemical

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with KTB Investment and Youl Chon

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

The idea behind KTB Investment Securities and Youl Chon Chemical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..