Correlation Between Youl Chon and ASTORY CoLtd

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

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

Diversification Opportunities for Youl Chon and ASTORY CoLtd

-0.31

Correlation Coefficient

Youl Chon  ASTORY CoLtd

Very good diversification

The 3 months correlation between Youl and ASTORY is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Youl Chon Chemical and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd and Youl Chon 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 Youl Chon Chemical are associated (or correlated) with ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of Youl Chon i.e., Youl Chon and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between Youl Chon and ASTORY CoLtd

Assuming the 90 days trading horizon Youl Chon is expected to generate 33.01 times less return on investment than ASTORY CoLtd. In addition to that, Youl Chon is 1.2 times more volatile than ASTORY CoLtd. It trades about 0.0 of its total potential returns per unit of risk. ASTORY CoLtd is currently generating about 0.13 per unit of volatility. If you would invest  676,000  in ASTORY CoLtd on September 16, 2024 and sell it today you would earn a total of  167,000  from holding ASTORY CoLtd or generate 24.7% return on investment over 90 days.

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

Youl Chon Chemical  vs.  ASTORY CoLtd

Youl Chon Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

ASTORY CoLtd

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Youl Chon and ASTORY CoLtd

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

The idea behind Youl Chon Chemical and ASTORY CoLtd 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.