Correlation Between Korean Reinsurance and Tway Air
Can any of the company-specific risk be diversified away by investing in both Korean Reinsurance and Tway Air 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 Korean Reinsurance and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Reinsurance Co and Tway Air Co, you can compare the effects of market volatilities on Korean Reinsurance and Tway Air 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 Korean Reinsurance with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Reinsurance and Tway Air.
Diversification Opportunities for Korean Reinsurance and Tway Air
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korean and Tway is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Korean Reinsurance Co and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Korean Reinsurance 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 Korean Reinsurance Co are associated (or correlated) with Tway Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tway Air has no effect on the direction of Korean Reinsurance i.e., Korean Reinsurance and Tway Air go up and down completely randomly.
Pair Corralation between Korean Reinsurance and Tway Air
Assuming the 90 days trading horizon Korean Reinsurance is expected to generate 37.3 times less return on investment than Tway Air. But when comparing it to its historical volatility, Korean Reinsurance Co is 2.38 times less risky than Tway Air. It trades about 0.01 of its potential returns per unit of risk. Tway Air Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 294,500 in Tway Air Co on October 30, 2024 and sell it today you would earn a total of 116,500 from holding Tway Air Co or generate 39.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Reinsurance Co vs. Tway Air Co
Performance |
| Timeline |
| Korean Reinsurance |
| Tway Air |
Korean Reinsurance and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Reinsurance and Tway Air
The main advantage of trading using opposite Korean Reinsurance and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Reinsurance position performs unexpectedly, Tway Air 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 Tway Air will offset losses from the drop in Tway Air's long position.| Korean Reinsurance vs. PNC Technologies co | Korean Reinsurance vs. Mirai Semiconductors Co | Korean Reinsurance vs. V One Tech Co | Korean Reinsurance vs. Hankukpackage Co |
| Tway Air vs. Namhae Chemical | Tway Air vs. Lotte Non Life Insurance | Tway Air vs. KPX Green Chemical | Tway Air vs. Youngchang Chemical Co |
Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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