Correlation Between Tokai Tokyo and Sculptor Capital

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

By analyzing existing cross correlation between Tokai Tokyo Financial and Sculptor Capital Management, you can compare the effects of market volatilities on Tokai Tokyo and Sculptor Capital 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 Tokyo with a short position of Sculptor Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokai Tokyo and Sculptor Capital.

Diversification Opportunities for Tokai Tokyo and Sculptor Capital

0.19

Correlation Coefficient

Tokai Tokyo  Sculptor Capital

Average diversification

The 3 months correlation between Tokai and Sculptor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tokai Tokyo Financial and Sculptor Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sculptor Capital Man and Tokai Tokyo 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 Tokyo Financial are associated (or correlated) with Sculptor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sculptor Capital Man has no effect on the direction of Tokai Tokyo i.e., Tokai Tokyo and Sculptor Capital go up and down completely randomly.

Pair Corralation between Tokai Tokyo and Sculptor Capital

Assuming the 90 days horizon Tokai Tokyo Financial is expected to generate 0.76 times more return on investment than Sculptor Capital. However, Tokai Tokyo Financial is 1.32 times less risky than Sculptor Capital. It trades about 0.12 of its potential returns per unit of risk. Sculptor Capital Management is currently generating about 0.05 per unit of risk. If you would invest  238.00  in Tokai Tokyo Financial on January 30, 2024 and sell it today you would earn a total of  43.00  from holding Tokai Tokyo Financial or generate 18.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	23.13%
Values	Daily Returns

Tokai Tokyo Financial  vs.  Sculptor Capital Management

Tokai Tokyo Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokai Tokyo Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tokai Tokyo is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sculptor Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sculptor Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Sculptor Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tokai Tokyo and Sculptor Capital

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

The idea behind Tokai Tokyo Financial and Sculptor Capital Management 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.