Correlation Between Tokai Carbon and DukSan Neolux

Can any of the company-specific risk be diversified away by investing in both Tokai Carbon and DukSan Neolux 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 DukSan Neolux 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 DukSan Neolux CoLtd, you can compare the effects of market volatilities on Tokai Carbon and DukSan Neolux 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 DukSan Neolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Carbon and DukSan Neolux.

Diversification Opportunities for Tokai Carbon and DukSan Neolux

0.68

Correlation Coefficient

Tokai Carbon  DukSan Neolux

Poor diversification

The 3 months correlation between Tokai and DukSan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Carbon Korea and DukSan Neolux CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DukSan Neolux 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 DukSan Neolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DukSan Neolux CoLtd has no effect on the direction of Tokai Carbon i.e., Tokai Carbon and DukSan Neolux go up and down completely randomly.

Pair Corralation between Tokai Carbon and DukSan Neolux

Assuming the 90 days trading horizon Tokai Carbon Korea is expected to under-perform the DukSan Neolux. But the stock apears to be less risky and, when comparing its historical volatility, Tokai Carbon Korea is 1.06 times less risky than DukSan Neolux. The stock trades about -0.01 of its potential returns per unit of risk. The DukSan Neolux CoLtd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,490,000  in DukSan Neolux CoLtd on October 9, 2024 and sell it today you would lose (540,000) from holding DukSan Neolux CoLtd or give up 15.47% of portfolio value over 90 days.

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

Tokai Carbon Korea  vs.  DukSan Neolux CoLtd

Tokai Carbon Korea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokai Carbon Korea 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DukSan Neolux CoLtd

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DukSan Neolux CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DukSan Neolux is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tokai Carbon and DukSan Neolux

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

The idea behind Tokai Carbon Korea and DukSan Neolux CoLtd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.