Correlation Between Tokai Carbon and Cloud Air
Can any of the company-specific risk be diversified away by investing in both Tokai Carbon and Cloud Air 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 Tokai Carbon and Cloud Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokai Carbon Korea and Cloud Air CoLtd, you can compare the effects of market volatilities on Tokai Carbon and Cloud Air 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 Tokai Carbon with a short position of Cloud Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Carbon and Cloud Air.
Diversification Opportunities for Tokai Carbon and Cloud Air
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tokai and Cloud is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Carbon Korea and Cloud Air CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Air CoLtd and Tokai Carbon 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 Tokai Carbon Korea are associated (or correlated) with Cloud Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Air CoLtd has no effect on the direction of Tokai Carbon i.e., Tokai Carbon and Cloud Air go up and down completely randomly.
Pair Corralation between Tokai Carbon and Cloud Air
Assuming the 90 days trading horizon Tokai Carbon Korea is expected to under-perform the Cloud Air. In addition to that, Tokai Carbon is 1.1 times more volatile than Cloud Air CoLtd. It trades about -0.02 of its total potential returns per unit of risk. Cloud Air CoLtd is currently generating about -0.02 per unit of volatility. If you would invest 116,500 in Cloud Air CoLtd on August 24, 2024 and sell it today you would lose (32,000) from holding Cloud Air CoLtd or give up 27.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokai Carbon Korea vs. Cloud Air CoLtd
Performance |
| Timeline |
| Tokai Carbon Korea |
| Cloud Air CoLtd |
Tokai Carbon and Cloud Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokai Carbon and Cloud Air
The main advantage of trading using opposite Tokai Carbon and Cloud Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokai Carbon position performs unexpectedly, Cloud Air 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 Cloud Air will offset losses from the drop in Cloud Air's long position.| Tokai Carbon vs. LEENO Industrial | Tokai Carbon vs. Wonik Ips Co | Tokai Carbon vs. Dongjin Semichem Co | Tokai Carbon vs. Hana Materials |
| Cloud Air vs. NH Investment Securities | Cloud Air vs. Shinsegae Information Communication | Cloud Air vs. Digital Power Communications | Cloud Air vs. Lindeman Asia Investment |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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