Correlation Between Tokai Carbon and Hyunwoo Industrial
Can any of the company-specific risk be diversified away by investing in both Tokai Carbon and Hyunwoo Industrial 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 Hyunwoo Industrial 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 Hyunwoo Industrial Co, you can compare the effects of market volatilities on Tokai Carbon and Hyunwoo Industrial 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 Hyunwoo Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Carbon and Hyunwoo Industrial.
Diversification Opportunities for Tokai Carbon and Hyunwoo Industrial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tokai and Hyunwoo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Carbon Korea and Hyunwoo Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyunwoo Industrial 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 Hyunwoo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyunwoo Industrial has no effect on the direction of Tokai Carbon i.e., Tokai Carbon and Hyunwoo Industrial go up and down completely randomly.
Pair Corralation between Tokai Carbon and Hyunwoo Industrial
Assuming the 90 days trading horizon Tokai Carbon is expected to generate 1.94 times less return on investment than Hyunwoo Industrial. But when comparing it to its historical volatility, Tokai Carbon Korea is 1.08 times less risky than Hyunwoo Industrial. It trades about 0.04 of its potential returns per unit of risk. Hyunwoo Industrial Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 256,500 in Hyunwoo Industrial Co on November 4, 2024 and sell it today you would earn a total of 6,000 from holding Hyunwoo Industrial Co or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokai Carbon Korea vs. Hyunwoo Industrial Co
Performance |
| Timeline |
| Tokai Carbon Korea |
| Hyunwoo Industrial |
Tokai Carbon and Hyunwoo Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokai Carbon and Hyunwoo Industrial
The main advantage of trading using opposite Tokai Carbon and Hyunwoo Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokai Carbon position performs unexpectedly, Hyunwoo Industrial 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 Hyunwoo Industrial will offset losses from the drop in Hyunwoo Industrial'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 |
| Hyunwoo Industrial vs. Seoul Electronics Telecom | Hyunwoo Industrial vs. Hankuk Steel Wire | Hyunwoo Industrial vs. Seah Steel Corp | Hyunwoo Industrial vs. Finebesteel |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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