Correlation Between Tway Air and SH Energy
Can any of the company-specific risk be diversified away by investing in both Tway Air and SH Energy 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 Tway Air and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tway Air Co and SH Energy Chemical, you can compare the effects of market volatilities on Tway Air and SH Energy 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 Tway Air with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and SH Energy.
Diversification Opportunities for Tway Air and SH Energy
Modest diversification
The 3 months correlation between Tway and 002360 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Tway Air 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 Tway Air Co are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Tway Air i.e., Tway Air and SH Energy go up and down completely randomly.
Pair Corralation between Tway Air and SH Energy
Assuming the 90 days trading horizon Tway Air Co is expected to under-perform the SH Energy. But the stock apears to be less risky and, when comparing its historical volatility, Tway Air Co is 1.17 times less risky than SH Energy. The stock trades about -0.12 of its potential returns per unit of risk. The SH Energy Chemical is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 56,900 in SH Energy Chemical on September 19, 2024 and sell it today you would lose (5,100) from holding SH Energy Chemical or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. SH Energy Chemical
Performance |
| Timeline |
| Tway Air |
| SH Energy Chemical |
Tway Air and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and SH Energy
The main advantage of trading using opposite Tway Air and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| Tway Air vs. Jin Air Co | Tway Air vs. Air Busan Co | Tway Air vs. Solution Advanced Technology | Tway Air vs. Busan Industrial Co |
| SH Energy vs. Samsung Electronics Co | SH Energy vs. Samsung Electronics Co | SH Energy vs. SK Hynix | SH Energy vs. POSCO Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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