Correlation Between Busan Industrial and Tway Air
Can any of the company-specific risk be diversified away by investing in both Busan Industrial 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 Busan Industrial and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Industrial Co and Tway Air Co, you can compare the effects of market volatilities on Busan Industrial 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 Busan Industrial with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Tway Air.
Diversification Opportunities for Busan Industrial and Tway Air
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Busan and Tway is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial 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 Busan Industrial 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 Busan Industrial 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 Busan Industrial i.e., Busan Industrial and Tway Air go up and down completely randomly.
Pair Corralation between Busan Industrial and Tway Air
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, Busan Industrial Co is 1.2 times less risky than Tway Air. The stock trades about -0.02 of its potential returns per unit of risk. The Tway Air Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 314,500 in Tway Air Co on August 28, 2024 and sell it today you would lose (20,000) from holding Tway Air Co or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Tway Air Co
Performance |
| Timeline |
| Busan Industrial |
| Tway Air |
Busan Industrial and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Tway Air
The main advantage of trading using opposite Busan Industrial and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial 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.| Busan Industrial vs. Sangsin Energy Display | Busan Industrial vs. Inzi Display CoLtd | Busan Industrial vs. Top Material Co | Busan Industrial vs. Ssangyong Materials Corp |
| Tway Air vs. Busan Industrial Co | Tway Air vs. Busan Ind | Tway Air vs. Mirae Asset Daewoo | Tway Air vs. UNISEM 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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