Correlation Between KPX Green and Tway Air
Can any of the company-specific risk be diversified away by investing in both KPX Green 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 KPX Green and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and Tway Air Co, you can compare the effects of market volatilities on KPX Green 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 KPX Green with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and Tway Air.
Diversification Opportunities for KPX Green and Tway Air
Good diversification
The 3 months correlation between KPX and Tway is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and KPX Green 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 KPX Green Chemical 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 KPX Green i.e., KPX Green and Tway Air go up and down completely randomly.
Pair Corralation between KPX Green and Tway Air
Assuming the 90 days trading horizon KPX Green Chemical is expected to generate 2.14 times more return on investment than Tway Air. However, KPX Green is 2.14 times more volatile than Tway Air Co. It trades about 0.28 of its potential returns per unit of risk. Tway Air Co is currently generating about 0.2 per unit of risk. If you would invest 557,123 in KPX Green Chemical on October 18, 2024 and sell it today you would earn a total of 176,877 from holding KPX Green Chemical or generate 31.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. Tway Air Co
Performance |
| Timeline |
| KPX Green Chemical |
| Tway Air |
KPX Green and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and Tway Air
The main advantage of trading using opposite KPX Green and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green 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.| KPX Green vs. Kyung In Synthetic Corp | KPX Green vs. Homecast CoLtd | KPX Green vs. Sung Bo Chemicals | KPX Green vs. iNtRON Biotechnology |
| Tway Air vs. LG Chemicals | Tway Air vs. KPX Green Chemical | Tway Air vs. Dongnam Chemical Co | Tway Air vs. Kukdong Oil Chemicals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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