Correlation Between YungShin Global and Everlight Chemical

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

By analyzing existing cross correlation between YungShin Global Holding and Everlight Chemical Industrial, you can compare the effects of market volatilities on YungShin Global and Everlight Chemical 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 YungShin Global with a short position of Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YungShin Global and Everlight Chemical.

Diversification Opportunities for YungShin Global and Everlight Chemical

0.63

Correlation Coefficient

YungShin Global  Everlight Chemical

Poor diversification

The 3 months correlation between YungShin and Everlight is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding YungShin Global Holding and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical and YungShin Global 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 YungShin Global Holding are associated (or correlated) with Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of YungShin Global i.e., YungShin Global and Everlight Chemical go up and down completely randomly.

Pair Corralation between YungShin Global and Everlight Chemical

Assuming the 90 days trading horizon YungShin Global Holding is expected to generate 0.82 times more return on investment than Everlight Chemical. However, YungShin Global Holding is 1.22 times less risky than Everlight Chemical. It trades about -0.02 of its potential returns per unit of risk. Everlight Chemical Industrial is currently generating about -0.11 per unit of risk. If you would invest  5,680  in YungShin Global Holding on September 13, 2024 and sell it today you would lose (170.00) from holding YungShin Global Holding or give up 2.99% of portfolio value over 90 days.

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

YungShin Global Holding  vs.  Everlight Chemical Industrial

YungShin Global Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YungShin Global Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, YungShin Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Everlight Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everlight Chemical Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with YungShin Global and Everlight Chemical

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

The idea behind YungShin Global Holding and Everlight Chemical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.