Correlation Between Keum Kang and Tway Air
Can any of the company-specific risk be diversified away by investing in both Keum Kang 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 Keum Kang and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keum Kang Steel and Tway Air Co, you can compare the effects of market volatilities on Keum Kang 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 Keum Kang with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keum Kang and Tway Air.
Diversification Opportunities for Keum Kang and Tway Air
Significant diversification
The 3 months correlation between Keum and Tway is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Keum Kang Steel and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Keum Kang 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 Keum Kang Steel 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 Keum Kang i.e., Keum Kang and Tway Air go up and down completely randomly.
Pair Corralation between Keum Kang and Tway Air
Assuming the 90 days trading horizon Keum Kang Steel is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, Keum Kang Steel is 1.28 times less risky than Tway Air. The stock trades about -0.03 of its potential returns per unit of risk. The Tway Air Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 197,500 in Tway Air Co on September 3, 2024 and sell it today you would earn a total of 97,000 from holding Tway Air Co or generate 49.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keum Kang Steel vs. Tway Air Co
Performance |
| Timeline |
| Keum Kang Steel |
| Tway Air |
Keum Kang and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keum Kang and Tway Air
The main advantage of trading using opposite Keum Kang and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keum Kang 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.| Keum Kang vs. Tway Air Co | Keum Kang vs. Wave Electronics Co | Keum Kang vs. Anam Electronics Co | Keum Kang vs. UJU Electronics Co |
| Tway Air vs. Jin Air Co | Tway Air vs. Air Busan Co | Tway Air vs. Busan Industrial Co | 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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