Correlation Between Dongsin Engineering and Tway Air
Can any of the company-specific risk be diversified away by investing in both Dongsin Engineering 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 Dongsin Engineering and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongsin Engineering Construction and Tway Air Co, you can compare the effects of market volatilities on Dongsin Engineering 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 Dongsin Engineering with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongsin Engineering and Tway Air.
Diversification Opportunities for Dongsin Engineering and Tway Air
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongsin and Tway is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dongsin Engineering Constructi and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Dongsin Engineering 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 Dongsin Engineering Construction 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 Dongsin Engineering i.e., Dongsin Engineering and Tway Air go up and down completely randomly.
Pair Corralation between Dongsin Engineering and Tway Air
Assuming the 90 days trading horizon Dongsin Engineering is expected to generate 1.63 times less return on investment than Tway Air. In addition to that, Dongsin Engineering is 1.48 times more volatile than Tway Air Co. It trades about 0.02 of its total potential returns per unit of risk. Tway Air Co is currently generating about 0.04 per unit of volatility. If you would invest 230,000 in Tway Air Co on August 27, 2024 and sell it today you would earn a total of 58,000 from holding Tway Air Co or generate 25.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongsin Engineering Constructi vs. Tway Air Co
Performance |
| Timeline |
| Dongsin Engineering |
| Tway Air |
Dongsin Engineering and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongsin Engineering and Tway Air
The main advantage of trading using opposite Dongsin Engineering and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongsin Engineering 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.| Dongsin Engineering vs. Busan Industrial Co | Dongsin Engineering vs. Busan Ind | Dongsin Engineering vs. Mirae Asset Daewoo | Dongsin Engineering vs. UNISEM Co |
| Tway Air vs. Ssangyong Materials Corp | Tway Air vs. Hanjin Transportation Co | Tway Air vs. PI Advanced Materials | Tway Air vs. CJ Seafood Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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