Correlation Between Dongwoon Anatech and Tokai Carbon

Can any of the company-specific risk be diversified away by investing in both Dongwoon Anatech and Tokai Carbon 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 Dongwoon Anatech and Tokai Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongwoon Anatech Co and Tokai Carbon Korea, you can compare the effects of market volatilities on Dongwoon Anatech and Tokai Carbon 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 Dongwoon Anatech with a short position of Tokai Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongwoon Anatech and Tokai Carbon.

Diversification Opportunities for Dongwoon Anatech and Tokai Carbon

0.87

Correlation Coefficient

Dongwoon Anatech  Tokai Carbon

Very poor diversification

The 3 months correlation between Dongwoon and Tokai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dongwoon Anatech Co and Tokai Carbon Korea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokai Carbon Korea and Dongwoon Anatech 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 Dongwoon Anatech Co are associated (or correlated) with Tokai Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokai Carbon Korea has no effect on the direction of Dongwoon Anatech i.e., Dongwoon Anatech and Tokai Carbon go up and down completely randomly.

Pair Corralation between Dongwoon Anatech and Tokai Carbon

Assuming the 90 days trading horizon Dongwoon Anatech is expected to generate 2.17 times less return on investment than Tokai Carbon. In addition to that, Dongwoon Anatech is 1.0 times more volatile than Tokai Carbon Korea. It trades about 0.06 of its total potential returns per unit of risk. Tokai Carbon Korea is currently generating about 0.14 per unit of volatility. If you would invest  6,880,000  in Tokai Carbon Korea on December 25, 2024 and sell it today you would earn a total of  1,690,000  from holding Tokai Carbon Korea or generate 24.56% return on investment over 90 days.

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

Dongwoon Anatech Co  vs.  Tokai Carbon Korea

Dongwoon Anatech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dongwoon Anatech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongwoon Anatech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tokai Carbon Korea

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tokai Carbon Korea are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tokai Carbon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongwoon Anatech and Tokai Carbon

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

The idea behind Dongwoon Anatech Co and Tokai Carbon Korea 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.