Correlation Between Tokai Carbon and SK Hynix
Can any of the company-specific risk be diversified away by investing in both Tokai Carbon and SK Hynix 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 SK Hynix 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 SK Hynix, you can compare the effects of market volatilities on Tokai Carbon and SK Hynix 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 SK Hynix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Carbon and SK Hynix.
Diversification Opportunities for Tokai Carbon and SK Hynix
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tokai and 000660 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Carbon Korea and SK Hynix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Hynix 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 SK Hynix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Hynix has no effect on the direction of Tokai Carbon i.e., Tokai Carbon and SK Hynix go up and down completely randomly.
Pair Corralation between Tokai Carbon and SK Hynix
Assuming the 90 days trading horizon Tokai Carbon Korea is expected to under-perform the SK Hynix. But the stock apears to be less risky and, when comparing its historical volatility, Tokai Carbon Korea is 1.48 times less risky than SK Hynix. The stock trades about -0.19 of its potential returns per unit of risk. The SK Hynix is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,614,100 in SK Hynix on September 6, 2024 and sell it today you would earn a total of 1,185,900 from holding SK Hynix or generate 7.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.31% |
Values | Daily Returns |
Tokai Carbon Korea vs. SK Hynix
Performance |
Timeline |
Tokai Carbon Korea |
SK Hynix |
Tokai Carbon and SK Hynix Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tokai Carbon and SK Hynix
The main advantage of trading using opposite Tokai Carbon and SK Hynix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokai Carbon position performs unexpectedly, SK Hynix 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 SK Hynix will offset losses from the drop in SK Hynix'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 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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