Correlation Between Ecocab and YOUNGHWA TECH

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

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

Diversification Opportunities for Ecocab and YOUNGHWA TECH

0.05

Correlation Coefficient

Ecocab  YOUNGHWA TECH

Significant diversification

The 3 months correlation between Ecocab and YOUNGHWA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ecocab Co and YOUNGHWA TECH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YOUNGHWA TECH and Ecocab 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 Ecocab Co are associated (or correlated) with YOUNGHWA TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YOUNGHWA TECH has no effect on the direction of Ecocab i.e., Ecocab and YOUNGHWA TECH go up and down completely randomly.

Pair Corralation between Ecocab and YOUNGHWA TECH

Assuming the 90 days trading horizon Ecocab Co is expected to under-perform the YOUNGHWA TECH. In addition to that, Ecocab is 1.27 times more volatile than YOUNGHWA TECH Co. It trades about -0.08 of its total potential returns per unit of risk. YOUNGHWA TECH Co is currently generating about 0.01 per unit of volatility. If you would invest  721,424  in YOUNGHWA TECH Co on December 1, 2024 and sell it today you would lose (4,424) from holding YOUNGHWA TECH Co or give up 0.61% of portfolio value over 90 days.

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

Ecocab Co  vs.  YOUNGHWA TECH Co

Ecocab

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecocab Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

YOUNGHWA TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days YOUNGHWA TECH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, YOUNGHWA TECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecocab and YOUNGHWA TECH

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

The idea behind Ecocab Co and YOUNGHWA TECH Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.