Correlation Between Iljin Display and Tway Air
Can any of the company-specific risk be diversified away by investing in both Iljin Display 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 Iljin Display and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Tway Air Co, you can compare the effects of market volatilities on Iljin Display 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 Iljin Display with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Tway Air.
Diversification Opportunities for Iljin Display and Tway Air
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iljin and Tway is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Iljin Display 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 Iljin Display 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 Iljin Display i.e., Iljin Display and Tway Air go up and down completely randomly.
Pair Corralation between Iljin Display and Tway Air
Assuming the 90 days trading horizon Iljin Display is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Display is 3.24 times less risky than Tway Air. The stock trades about -0.29 of its potential returns per unit of risk. The Tway Air Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 308,500 in Tway Air Co on August 25, 2024 and sell it today you would lose (20,500) from holding Tway Air Co or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Iljin Display vs. Tway Air Co
Performance |
| Timeline |
| Iljin Display |
| Tway Air |
Iljin Display and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Display and Tway Air
The main advantage of trading using opposite Iljin Display and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display 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.The idea behind Iljin Display and Tway Air Co 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.| Tway Air vs. Jin Air Co | Tway Air vs. Busan Industrial Co | Tway Air vs. Busan Ind | Tway Air vs. Mirae Asset Daewoo |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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