Correlation Between Youngsin Metal and Prestige Biologics

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

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

Diversification Opportunities for Youngsin Metal and Prestige Biologics

0.57

Correlation Coefficient

Youngsin Metal  Prestige Biologics

Very weak diversification

The 3 months correlation between Youngsin and Prestige is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Youngsin Metal Industrial and Prestige Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Biologics and Youngsin Metal 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 Youngsin Metal Industrial are associated (or correlated) with Prestige Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Biologics has no effect on the direction of Youngsin Metal i.e., Youngsin Metal and Prestige Biologics go up and down completely randomly.

Pair Corralation between Youngsin Metal and Prestige Biologics

Assuming the 90 days trading horizon Youngsin Metal Industrial is expected to under-perform the Prestige Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Youngsin Metal Industrial is 1.19 times less risky than Prestige Biologics. The stock trades about -0.32 of its potential returns per unit of risk. The Prestige Biologics Co is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  658,000  in Prestige Biologics Co on September 5, 2024 and sell it today you would lose (109,000) from holding Prestige Biologics Co or give up 16.57% of portfolio value over 90 days.

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

Youngsin Metal Industrial  vs.  Prestige Biologics Co

Youngsin Metal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Youngsin Metal Industrial 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Prestige Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Youngsin Metal and Prestige Biologics

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

The idea behind Youngsin Metal Industrial and Prestige Biologics 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 Transaction History module to view history of all your transactions and understand their impact on performance.