Correlation Between People Technology and Tokai Carbon

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

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

Diversification Opportunities for People Technology and Tokai Carbon

0.82

Correlation Coefficient

People Technology  Tokai Carbon

Very poor diversification

The 3 months correlation between People and Tokai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding People Technology 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 People Technology 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 People Technology 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 People Technology i.e., People Technology and Tokai Carbon go up and down completely randomly.

Pair Corralation between People Technology and Tokai Carbon

Assuming the 90 days trading horizon People Technology is expected to generate 1.47 times more return on investment than Tokai Carbon. However, People Technology is 1.47 times more volatile than Tokai Carbon Korea. It trades about -0.07 of its potential returns per unit of risk. Tokai Carbon Korea is currently generating about -0.19 per unit of risk. If you would invest  4,860,000  in People Technology on September 7, 2024 and sell it today you would lose (750,000) from holding People Technology or give up 15.43% of portfolio value over 90 days.

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

People Technology  vs.  Tokai Carbon Korea

People Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days People Technology 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with People Technology and Tokai Carbon

The main advantage of trading using opposite People Technology and Tokai Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if People Technology 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 People Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.