Correlation Between Tokai Carbon and TES
Can any of the company-specific risk be diversified away by investing in both Tokai Carbon and TES 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 TES 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 TES Co, you can compare the effects of market volatilities on Tokai Carbon and TES 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 TES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Carbon and TES.
Diversification Opportunities for Tokai Carbon and TES
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tokai and TES is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Carbon Korea and TES Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TES Co 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 TES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TES Co has no effect on the direction of Tokai Carbon i.e., Tokai Carbon and TES go up and down completely randomly.
Pair Corralation between Tokai Carbon and TES
Assuming the 90 days trading horizon Tokai Carbon Korea is expected to under-perform the TES. In addition to that, Tokai Carbon is 1.07 times more volatile than TES Co. It trades about -0.35 of its total potential returns per unit of risk. TES Co is currently generating about -0.18 per unit of volatility. If you would invest 1,627,000 in TES Co on August 29, 2024 and sell it today you would lose (153,000) from holding TES Co or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokai Carbon Korea vs. TES Co
Performance |
| Timeline |
| Tokai Carbon Korea |
| TES Co |
Tokai Carbon and TES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokai Carbon and TES
The main advantage of trading using opposite Tokai Carbon and TES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokai Carbon position performs unexpectedly, TES 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 TES will offset losses from the drop in TES's long position.| Tokai Carbon vs. SK Hynix | Tokai Carbon vs. LX Semicon Co | Tokai Carbon vs. People Technology | Tokai Carbon vs. Hana Materials |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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