Correlation Between Korea Computer and Tway Air
Can any of the company-specific risk be diversified away by investing in both Korea Computer 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 Korea Computer and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Tway Air Co, you can compare the effects of market volatilities on Korea Computer 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 Korea Computer with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Tway Air.
Diversification Opportunities for Korea Computer and Tway Air
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Tway is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Korea Computer 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 Korea Computer 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 Korea Computer i.e., Korea Computer and Tway Air go up and down completely randomly.
Pair Corralation between Korea Computer and Tway Air
Assuming the 90 days trading horizon Korea Computer is expected to generate 3.28 times less return on investment than Tway Air. In addition to that, Korea Computer is 1.02 times more volatile than Tway Air Co. It trades about 0.01 of its total potential returns per unit of risk. Tway Air Co is currently generating about 0.05 per unit of volatility. If you would invest 227,500 in Tway Air Co on September 3, 2024 and sell it today you would earn a total of 67,000 from holding Tway Air Co or generate 29.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. Tway Air Co
Performance |
| Timeline |
| Korea Computer |
| Tway Air |
Korea Computer and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Tway Air
The main advantage of trading using opposite Korea Computer and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer 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.| Korea Computer vs. Dongsin Engineering Construction | Korea Computer vs. Doosan Fuel Cell | Korea Computer vs. Daishin Balance 1 | Korea Computer vs. Total Soft Bank |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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