Correlation Between Eugene Technology and Youl Chon

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

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

Diversification Opportunities for Eugene Technology and Youl Chon

0.73

Correlation Coefficient

Eugene Technology  Youl Chon

Poor diversification

The 3 months correlation between Eugene and Youl is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd 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 Eugene Technology 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 Eugene Technology CoLtd 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 Eugene Technology i.e., Eugene Technology and Youl Chon go up and down completely randomly.

Pair Corralation between Eugene Technology and Youl Chon

Assuming the 90 days trading horizon Eugene Technology is expected to generate 1.83 times less return on investment than Youl Chon. But when comparing it to its historical volatility, Eugene Technology CoLtd is 1.47 times less risky than Youl Chon. It trades about 0.43 of its potential returns per unit of risk. Youl Chon Chemical is currently generating about 0.54 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Eugene Technology CoLtd  vs.  Youl Chon Chemical

Eugene Technology CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Eugene Technology and Youl Chon

The main advantage of trading using opposite Eugene Technology and Youl Chon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eugene Technology 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 Eugene Technology CoLtd 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.