Correlation Between DukSan Neolux and Tokai Carbon

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

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

Diversification Opportunities for DukSan Neolux and Tokai Carbon

0.68

Correlation Coefficient

DukSan Neolux  Tokai Carbon

Poor diversification

The 3 months correlation between DukSan and Tokai is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DukSan Neolux CoLtd 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 DukSan Neolux 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 DukSan Neolux CoLtd 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 DukSan Neolux i.e., DukSan Neolux and Tokai Carbon go up and down completely randomly.

Pair Corralation between DukSan Neolux and Tokai Carbon

Assuming the 90 days trading horizon DukSan Neolux CoLtd is expected to generate 1.73 times more return on investment than Tokai Carbon. However, DukSan Neolux is 1.73 times more volatile than Tokai Carbon Korea. It trades about 0.44 of its potential returns per unit of risk. Tokai Carbon Korea is currently generating about 0.3 per unit of risk. If you would invest  2,245,000  in DukSan Neolux CoLtd on October 9, 2024 and sell it today you would earn a total of  705,000  from holding DukSan Neolux CoLtd or generate 31.4% return on investment over 90 days.

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

DukSan Neolux CoLtd  vs.  Tokai Carbon Korea

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.

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.

Pair Trading with DukSan Neolux and Tokai Carbon

The main advantage of trading using opposite DukSan Neolux and Tokai Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DukSan Neolux 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 DukSan Neolux CoLtd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.