Correlation Between Kbi Metal and Tway Air
Can any of the company-specific risk be diversified away by investing in both Kbi Metal 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 Kbi Metal and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kbi Metal Co and Tway Air Co, you can compare the effects of market volatilities on Kbi Metal 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 Kbi Metal with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kbi Metal and Tway Air.
Diversification Opportunities for Kbi Metal and Tway Air
Significant diversification
The 3 months correlation between Kbi and Tway is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Kbi Metal 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 Kbi Metal 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 Kbi Metal 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 Kbi Metal i.e., Kbi Metal and Tway Air go up and down completely randomly.
Pair Corralation between Kbi Metal and Tway Air
Assuming the 90 days trading horizon Kbi Metal Co is expected to under-perform the Tway Air. In addition to that, Kbi Metal is 1.2 times more volatile than Tway Air Co. It trades about -0.4 of its total potential returns per unit of risk. Tway Air Co is currently generating about -0.26 per unit of volatility. If you would invest 349,000 in Tway Air Co on September 1, 2024 and sell it today you would lose (54,500) from holding Tway Air Co or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kbi Metal Co vs. Tway Air Co
Performance |
| Timeline |
| Kbi Metal |
| Tway Air |
Kbi Metal and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kbi Metal and Tway Air
The main advantage of trading using opposite Kbi Metal and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kbi Metal 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.| Kbi Metal vs. LG Display | Kbi Metal vs. Hyundai Motor | Kbi Metal vs. Hyundai Motor Co | Kbi Metal vs. Hyundai Motor Co |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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