Correlation Between Youngchang Chemical and ATON

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

By analyzing existing cross correlation between Youngchang Chemical Co and ATON Inc, you can compare the effects of market volatilities on Youngchang Chemical and ATON 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 Youngchang Chemical with a short position of ATON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Youngchang Chemical and ATON.

Diversification Opportunities for Youngchang Chemical and ATON

0.18

Correlation Coefficient

Youngchang Chemical  ATON

Average diversification

The 3 months correlation between Youngchang and ATON is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Youngchang Chemical Co and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc and Youngchang 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 Youngchang Chemical Co are associated (or correlated) with ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of Youngchang Chemical i.e., Youngchang Chemical and ATON go up and down completely randomly.

Pair Corralation between Youngchang Chemical and ATON

Assuming the 90 days trading horizon Youngchang Chemical Co is expected to generate 1.37 times more return on investment than ATON. However, Youngchang Chemical is 1.37 times more volatile than ATON Inc. It trades about 0.06 of its potential returns per unit of risk. ATON Inc is currently generating about 0.05 per unit of risk. If you would invest  1,159,581  in Youngchang Chemical Co on October 24, 2024 and sell it today you would earn a total of  1,105,419  from holding Youngchang Chemical Co or generate 95.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.0%
Values	Daily Returns

Youngchang Chemical Co  vs.  ATON Inc

Youngchang Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Youngchang Chemical Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Youngchang Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

ATON Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATON Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ATON sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Youngchang Chemical and ATON

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

The idea behind Youngchang Chemical Co and ATON Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.